- How to Avoid Excessive Electric Bills During the Heat of the Summer - August 3, 2020
- How to Spend Less Money on Bathroom Remodeling - August 3, 2020
- How to Use Personal Budgeting Skills for Your Business When Starting Out - August 3, 2020
Delays in payment can adversely affect your business, causing lags in cash flow and reliance on expensive lines of credit. To keep your business capital flowing, you should pay careful attention to your accounts receivable, to ensure that payment is being made on time and in full. Here are a few tips to help ensure customers pay their invoices in a timely manner.
Make Sure Customers Understand Payment Terms Up Front
You can avoid confusion and delay in payment if you provide clear information on payment at the outset of their purchase. Many businesses post information on the premises about when payment is expected. The invoice itself should have a designated, clearly legible area that states the terms of payment. Your sales personnel may also be required to inform customers at time of the purchase. By using multiple methods, customers are made fully aware of their responsibility for timely payment.
Get Your Invoice to the Right Person
In many cases, delays in payment are caused by sending an invoice to the wrong party or the wrong department. Your company must then rely on a person making the effort to get the invoice to the right party. Many companies have dedicated personnel to have financial matters or may even have subsidiaries that must direct invoices to a parent company. This can lead to extended delays. At the outset of your sale, inquire about where the invoice should be sent. If possible, get a name to which you can direct the invoice. This simple measure can eliminate many instances of delayed payment of invoices.
Don’t Allow Invoices to Linger
Another problem that can affect the cash flow from invoicing is inattention to accounts receivable reports. During busy periods, an invoice can quickly pass from 30 days to 60 days, without anyone taking action to collect on it. A good accounts receivable management system will help you to stay alert to the status of all your invoices quickly and easily, so you can take appropriate action as needed.
Provide Gentle Reminders
Don’t be afraid to notify customers of late payment, but always do so using polite and gentle language. As a business, you must always respect your customers’ time and other demands. Your effort to remind them as gently as possible will maintain good relations that translate into more business in the future. Mention turning over invoices to a collection company only as the very last resort.
Your accounts receivable is an important asset to your company. Allowing customers to drag out payment can end up hurting your cash flow and your business. Keep these tips in mind during your daily business activities, to ensure that the money keeps flowing, to keep your company finances healthy.
Anica Oaks is a professional content and copywriter who graduated from the University of San Francisco. She loves dogs, the ocean, and anything outdoor-related. You can connect with Anica on Twitter @AnicaOaks.
All content on this site is the property of Taxbot, LLC, The Profit Junkie Podcast, or the author. You may link to any article that you wish, or share via the social media buttons below. However, please do not copy articles or images for use on other sites without express written permission.