Accounts Receivable management is probably one of the toughest parts of running a business. Collecting overdue payments is not easy because there can be numerous reasons for why a client may not have made the payment, which is why you need to handle the situation with the utmost care. Here are some accounts receivable solutions to help you deal with your overdue payments.
- Don’t Procrastinate– Some business owners aren’t sure about when they should start the collection efforts. Collection efforts can begin as soon as your product has been delivered, service has been provided or project has been completed. This will not only improve your cash flow, it will also help you build a better relationship with your client.
- Record Details of Collection Efforts– In accounts receivable solutions, it is important that you document all collection communication. This will not only serve as proof of your attempts to contact the client, but will also provide you with a clear picture of how things are and information to develop a collection strategy. Always remember that persistence is key- the more persistent you are, the more chances there are of you getting paid.
- Offer Alternative Payment Options– It always helps to have multiple modes of payment. This will make it easier for clients to pay you and clear dues.
- Never Harass or Threaten– It is easy to lose your cool when all your attempts at collecting overdue payments have yielded no results. You will be tempted to threaten your client or use inappropriate language at this point, but you should keep your cool at all times. To behave otherwise would be unprofessional and can damage your reputation.
Accounts Receivable management can be very difficult on business owners. If you find that it is taking a toll on you and your business is suffering, you could consider hiring an accounts receivable solutions firm.
What do you do when you have to pay your employees, purchase stuff for office or for money to keep your business up and running? Dig into your working capital of course. To keep your business running, you need to have a positive working capital at all times, which means well managed AR and AP. Of these AR is tougher to manage, simply because it requires you to depend on others, namely clients and customers. But it doesn’t have to be so tough; learn how you can handle accounts receivable management effectively.
- Research Potential Client’s Financial and Credit History before Doing Business– A thorough evaluation of a potential client’s financial and credit history can go a long way in ensuring you don’t end up in a messy situation. Talking to representatives of other companies they have done business with or businesses that outsource receivables is also a good idea. If you find that the company is in debt and is obviously struggling to make payments, you can act accordingly.
- Clear Payment Terms and Information– Clarity in payment matters is important when doing business. Make sure you and your client are clear on the payment terms and provide an estimate of costs well in advance.
- Use Electronic Invoicing Facilities– How many times have you forgotten to send out invoices? Use electronic invoicing and you won’t have to worry about this ever again. Your invoices can be sent out as soon as your projects are completed and you can also be sure that the invoices reach the client without fail; no more getting lost in the mail.
- Use Multiple Payment Options– Payments may also be delayed if your modes of payment are inconvenient for clients. Offering multiple modes of payment will help to facilitate faster and timely payments.
- Outsource Receivables Management– Proper AR management is vital for your business to run smoothly. If you do not have the resources or time to devote to accounts receivable management, it would be better to outsource it, simply because you cannot afford to have AR ignored. Invest in a good account receivable management company and you won’t regret it.