Deliveries still going to an account that has not paid
A bistro has been a good account for years. Lately its invoices are paid later and later. Nobody chases, partly because the rep does not want to upset the owner and partly because nobody is sure whose job it is. Deliveries keep going out every week. By the time someone looks at the aged debt report, the balance is uncomfortably large.
Meanwhile, three other accounts are simply forgetting, and would pay if anyone asked.
Why chasing is always late
Credit control in a wine business is usually a side task. The accounts package knows who owes what, but the information does not reach the people making decisions each day: the rep planning visits, the person picking the delivery, the manager agreeing a new order.
- Reminders depend on someone remembering to send them.
- The rep does not see the account's balance when taking an order.
- Delivery runs go out regardless of what is overdue.
- Credit limits are informal, if they exist at all.
- Restaurant staff who approve invoices change often, so reminders go to the wrong person.
What late payment costs
Cash tied up in trade debt is cash not available for en primeur commitments, stock purchases or wages. A large overdue balance is a real risk if a restaurant closes, which happens. Chasing late, and in a hurry, is more likely to damage the relationship than steady, polite reminders from the start.
Trade debt also behaves differently from retail. A restaurant's invoices are often approved by a manager and paid by a bookkeeper or a group finance office somewhere else, on a payment run that happens once or twice a month. Miss that run because the invoice went to the wrong person, and you wait another fortnight. Knowing who pays, and when, matters as much as sending the reminder.
What terms and limits you set is your decision and your accountant's. The job here is making sure they are actually applied.
Credit control we set up
- Each trade account's terms and credit limit are recorded, along with the right contact for invoices, which the account can update.
- Invoice and payment data is read from your accounts package, such as Xero, Sage or QuickBooks, so balances are always current.
- Reminders go out on a schedule you set, in your own wording: a friendly note before the due date, a reminder after it, a firmer message later.
- Reps see each account's balance and status on their phone before visiting or taking an order.
- When an order would take an account over its limit, or the account has invoices beyond a point you choose, the order is held for a manager to approve before it is picked.
- A weekly summary lists overdue accounts, promises to pay and any held orders.
| Account status | What happens to new orders | Who is told |
|---|---|---|
| Within terms | Processed normally | Nobody |
| Overdue, within limit | Processed, reminder sent | Account contact |
| Over limit | Held for approval | Manager and rep |
| Seriously overdue | Held, account contacted | Manager decides |
A held order is not an automatic refusal. It puts the decision in front of a person with the facts, which is where it belongs.
Steady, polite, on time
Most late payers pay once reminded promptly and politely, and those reminders now happen without anyone having to remember. The rep walks into a restaurant knowing its balance, which makes a friendly word possible. Managers approve or hold orders with the numbers in front of them, rather than discovering a problem at month end.
On a normal Monday, the summary shows four accounts overdue. Three were sent reminders last week and two have since paid. One has a held order, and the manager rings the owner, agrees a payment date and releases the order.
Is this your aged debt report?
- Nobody owns chasing trade accounts.
- Deliveries go out to accounts with long overdue invoices.
- Reps do not know an account's balance when taking orders.
- Credit limits are informal or missing.
- Reminders go to staff who left the restaurant months ago.