New financial year, new way of doing business

Roger Mendelson, CEO of Prushka Fast Debt Recovery

Small businesses tend to be focused on growth, development, obtaining new business and developing exciting products and services, leaving little time to effectively manage their ordering process.

Taking customers' orders is a critical activity for any business; if there are no customers, you have no business. Therefore, it is in your best interest to make ordering as easy as possible. If it is too difficult, time consuming or cumbersome to order from you, customers will simply go elsewhere to avoid the trouble.

Why not start this financial year with the resolution to set up good processes in order to protect your business' cash flow and protect yourself from bad payers.

It doesn’t take long to set up a good ordering system and, similar to constructing a building, if the foundations are good, the building will last for a long time, if not, the building itself will never be any good.

It goes without saying but documenting the process and leaving an email trail can greatly reduce future stress and aggravation.

To simplify the ordering process, break it down into three stages and ensure all three work in harmony, starting with taking the customer's order, confirming the order and confirming completion of the order to receive payment.

Having made this decision, set up processes so that the following is standard procedure.

When accepting an order

The initial step comes with obtaining information about your new customer. Don't request unnecessary or irrelevant information from the customer, only ask for what you need in order to successfully process and deliver the order and then chase payment if it is required.

Set up standard format emails, with nicely presented graphics, which properly showcase the professionalism of your business.

The email should clearly state that the order is subject to your trading terms. These terms should be detailed in full on your website should be linked from each email.

Every business must have concise trading terms in place. If it doesn't, the terms of any contract between you and the customer will be determined by emails, quotations provided, telephone conversations, SMSs etc. This can be a recipe for disaster if you ultimately have to sue the customer.

Confirming the order

Regardless of how the order is taken, always confirm by email. Either at the time of the order, or ideally within two days of receiving the order.

The email should preferably request the customer acknowledge the order by replying. It is a good idea to insert a box on the email which clearly details how it is to be acknowledged. If you are uncomfortable with this, at least provide clear wording in the email such as “Unless we hear from you to the contrary within one working day, we will assume that you have accepted the terms of this order".

Your confirmation email should include:

  • An order reference number

  • The customer's name

  • Your bank is becoming difficult

  • A description of what has been ordered (plain language, with specifications where required)

  • Full details of all the costs and what is and isn't included (eg. Installation and delivery)

  • If applicable, information about delivery or installation including dates and any customer requirements

  • A contact number and, if possible, home address (if different to delivery address) for easy reference

  • Who the customer can contact if they have any queries regarding the order and any legal requirements regarding contracts.

  • If there are any unforeseen changes to the initial order by either you or the customer, you must confirm and document these changes both with the customer and internally.

    Completing the order and receiving payment

    Stop sending out statements by post. Instead, send a reminder for payment by email. This MUST be followed by a phone call to the customer.

    If installment or agreed deferral of payment terms are agreed to with the customer, always confirm by email. It is preferable to set up pro forma emails to cover these situations.

    It is also worth getting advice from a lawyer on the wording to be used so, if the arrangement is defaulted, you will immediately be able to sue for the whole amount due together with indemnity legal costs and all other collection costs.

    It may seem very simple, however this could be what separates you from your competitor.

    Further to this, by carrying out the above, it will reduce customer disputes, your cash flow will improve and you will be much better prepared to recoup all debt collection costs from your bad paying customers.

    This article originally appeared on Business First Magazine.

    Roger Mendelson is CEO of Prushka Fast Debt Recovery Pty Ltd and is a principal of Mendelsons Lawyers Pty Ltd. Prushka acts for in excess of 52,000 small to medium size businesses across Australia and operates on the basis of NO RECOVERY - NO CHARGE service service. Roger is also the author of The Ten Mistakes Businesses Make and How to Avoid Them and Business Survival.