To all small to medium sized business owners, here are some simple tips that can be of use with your accounts receivable management or invoice collections. Although the following may appear to be fundamental concepts, they can be vital to the successful growth and profitability of your business.
1) Work with customers you can offer quick pay discounts to whenever possible. Even if only a few customers take them it will ease the cash flow crunch as your business grows.
2) Have an accounts receivable system and a computerized program to track the outstanding invoices. Knowing the outstanding on a detailed basis at the click of a mouse is essential for managing your business. This seems basic, yet there are a many companies that don’t allocate time to set up good systems.
3) Make sure that all your invoices are on time and consist of all relevant information including back up, purchase orders and proof of delivery to refer back to if customers dispute the invoices. Remember, the later you send out your invoices the longer it takes to get paid.
4) Call customers when the invoices are initially due and don’t wait until they are critically past due. You have a greater chance of getting paid when you make contact with your customers. First to call, first to get paid!
5) When you are offering credit you MUST collect on time. Keep in mind, there is a cost to extending terms to customers so if the terms are longer don’t forget to build that into your margin.
6) Check customer credit by using credit references and bank references along with credit information available on line and through credit reporting companies. Put some systems in place up front to limit the risk of bad debts.
7) Consider credit insurance especially if you have all your eggs in one basket.
FOLLOW THESE EASY STEPS AND SEE RESULTS TODAY!