The best way to prevent overdue invoices is to prevent doing business with bad credit history customers. The following are the 5 steps that one must follow to avoid overdue:
- Watch for new customers with a bad credit history.
- On starting a business with someone, you must make sure you stamp your invoices with the date that payment is due to you.
- Offer discounts for early payment and add interest to late payments.
- Phone customers and start trying to collect the day after a payment is due.
- Until a customer pays their bills, don´t do any more business with them.
According to a survey, almost 25% of small businesses struggle to collect payments from its clients. Companies that are unable to collect payment from their customer are forced to draw from their reserves. This results in lack of cash on hand of the owners to manage operations, grow their business and pay their employees. There are steps a firm can follow to manage its accounts receivable services and increase the cash flow. Follow the steps to improve your accounts receivable by getting paid faster:
Sending bills via email using the email invoice template to accelerate the invoicing process. Email ensures that the invoices reach the requisite party immediately without any delay which is not the case with snail mail. All you need to do is to confirm your clients’ email address beforehand.
Reduce Payment Terms:
Reducing payment terms works even better if you do it with email. One of the benefits of invoicing via email is that it allows the companies to reduce their payment terms.
Maintain a Healthy Work Relationship:
Happy customers pay their bills on time. If a customer runs out of cash, he will obviously prioritize the company with whom he has a positive and healthy relationship with the ones that regularly underperform. If you want to avoid late collections, work hard to fulfil your obligations and develop strong working relationships with all your clients. Just by making a few personal calls to the payment departments you can ensure not to wait on a late invoice.
Offer Multiple Payment Methods:
If you want to get paid on time, then the best way is to give your clients many options for clearing their debts. Sending cheques, paying through PayPal and credit card are the options that clients might prefer.
Consider Hiring an Accounting Company:
Managing your accounts receivable can take up a great amount of your time and energy. By hiring an accounting company to handle your finances, you have an option to reduce your workload and also boost the cash flow simultaneously.
Set Clear Credit Policies:
If you’ve worked with a customer for years, then it is likely that you might tend to offer a credit on your products and services. But extending too much credit can take a serious toll on your accounts receivable. Before setting up a credit account, you must make sure to check a business’ credit history to ensure it has a record of paying bills on time.
Make Collections a Last Resort:
It is the best option to choose to turn over unpaid invoices to a collection agency as the last option. Call the client personally and make one final appeal for payment before going on this route.