5 Tricks to Streamlining Accounts Receivable
Some businesses choose to send out invoices to customers who have purchased a product or service. This gives the customer some time to pay back the purchase. Generally, a limit of 30 days is set for the client to pay, but many companies, especially small businesses, find it difficult to manage the accounts receivable. To improve your company’s cash flow, implement these tips.
Contact Customers Immediately
A lot of small businesses are mindful of their reputation among the community. Many business owners do not want to come across as too pushy. However, if the date limit has been reached for an invoice, then you need to contact the other party right away. Many times, it was a simple oversight, and you will probably get paid quickly. This is much better than waiting and hoping you get your money.
Your invoice might have a due date of 30 days. However, it can be in your best interest to offer a small discount to clients who pay earlier than that. For example, you could take two percent off the final price if the customer pays within 20 days. This method is recommended for businesses that simply need a little more cash flow coming in.
Offer Payment Plans
You might be working with a small business owner yourself, which is why it is taking time to get your funds. Being a little understanding can be a real asset to your accounts receivable department. Instead of demanding all your money at once, float the idea of setting up a payment plan. Most clients will love this suggestion because they get more time to pay the final price, and they can pay in smaller installments.
Provide Easier Methods of Paying
Instead of having to deal with waiting for a check in the mail, it can be better if there is a way for clients to pay you electronically. You can often set these items up so that funds are taken directly from a customer’s bank account and put into yours on a specified date.
Follow Up With Legal Action If Necessary
If all else fails, then you may have no choice but to look into legal action. Many times, all you need to do is send a letter stating that you are commencing with legal action, and that will convince the client to pay.
Once you start utilizing these tips, you are bound to see an improvement in how often your accounts receivable are paid. Whether you run a small or large business, these tips are great for everyone.