The primary aim of all businesses is to generate income. As a business owner, one of the first things you should have in place is a system for AR management. Most business owners have a lot of trouble collecting payment, which is why it is vital that you understand this from the very start and ensure that you take steps to ensure effective AR management. Here are a few steps that you can take to curb the issue of late payments.
- Clearly State Terms of Payment– Believe it or not, most late payments result from miscommunication or misunderstandings about the terms of payment. So keep things simple, make sure your customers know and can easily remember your terms of payment and include them in every invoice.
- Send Payment Due Reminders– Send out payment due reminders to customers when their payments are due. Receivable management services and AR management tools are a better means of managing this task as it will require just a few clicks on your part, and your customers will get reminder notices. Make sure you include the due date and the terms of payment in the email.
- If a Payment is Past Due– Send out late payment notices as soon as the due date is over. Do not wait to collect names of all defaulters. Send out notices as and when the due date is past for each company. While this may seem like a lot of work, this measure is sure to yield results as it signals to your customer that on time payments are important to you.
- If a Payment is More than 30 Days Overdue– If your customer hasn’t paid up after 30 days, you are dealing with a delinquent customer. Continue to send regular notices and get help to ensure you do not lose your payment. The more days pass, the less chance there is of you receiving your payment.
If delinquent payments are a regular affair for your business, you should consider receivable management services. They are better equipped to handle such scenarios and can relieve you of the stress of dealing with AR issues.