Managing accounts receivable can be a stressful task if you seem to be attracting late paying customers. By following a few tips and remaining flexible you can better collect payments on time and manage late paying customers without going crazy. Utilize Payment Policies Set up payment terms to better manage accounts receivable. Customers who make payments on time can receive generous payment terms while late payers should receive the strictest terms. Keep dead beats on a leash to manage your receivables and let lagers know that you have your eye on them. Consider offering discounts to customers who pay bills early and improve payment terms for customers who have proven themselves to be responsible through their payment history.
Lay paying customers should be required to make big deposits on new buys and pay in cash to ease your anxieties. Edit Collection Policies to Remain Current Structure your AR collection policy to be up to date. Consider sending out invoices 5 days after purchase, sending out reminders 5 days before the payment is due and calling once the payment is a day late. You can also issue a follow up letter if the payment is not received within a week after the due date. Some customers might require credit limits to keep them on their toes and improve their payment habits. Select someone with excellent customer service skills to handle the accounts receivable end of things as these communications can become terse and quite stressful. Hire a trained professional who knows how to diffuse stressful situations and reach the desired outcome. Intend to keep your customers by working amicably through the payment process.
Express Gratitude to Customers Who Pay on Time Show your appreciation by sending personal letters to customers who make payments on time. Expressing your gratitude can help you gain the full trust of your clients and inspire individuals to pay on time in the future. Most people feel great after being appreciated for holding up their end of a deal. Consider sending thank you letters or even emails to show your appreciation and improve the quality of your relationship. Expressing just a tiny bit of gratitude for honoring a payment contract can go a long way. Be appreciative for your prompt customers to motivate these individuals to continue with their early or on time payments.
Remember to Be Flexible Alienating yourself from loyal customers over a few hundred dollars can have dire consequences for your business. Stop cheeping out and become a bit more flexible when the situation warrants. Customers might be experiencing cash flow problems or some other unforeseen incident which has created money problems for their business.
Look past a missed pay date or 2 in order to strengthen your relationship and gain the trust of the client. If you know that they have proven themselves to be trustworthy in the past with a stellar payment record you need not worry about a late payment here and there. If you do see a pattern of late payments over the period of weeks or months it might be time to have a heart to heart talk concerning their difficulties. In most cases you can extend the payment term or work out some other agreement which keeps both parties happy and solidifies the business relationship.
Receivables Funding May Be the Answer If you are experiencing cash flow issues because of your invoices, you might consider receivables funding to improve your financial picture. This involves selling your receivables to a financing company who will give you anywhere from 80 to 90 percent of the invoice value up front and pay you the remainder when the client pays the bill. This is minus their service fee of course. There are stipulations for using the service, such as the customer having a history of timely payments. Photo Credit