One of the vital parts of every business is the Accounts Receivable. It captures the money your customers owe to your business, used to pay bills and expenses. Without it, it can be hard to keep the doors open to provide your customers with what they need, leaving you unable to keep your business going.
This article will give you excellent tips on how to effectively manage your accounts receivables.
Run Credit Checks
Get to know the financial abilities of your clients. Nothing wrong with running a credit check and asking for references before extending customer credits. Doing so will help ensure that your client can pay you back and secure a smooth transaction between both parties. In any case, you can deny or ask for their payment upfront if they have unpaid payables.
Send invoices on time
Expect on-time payments if you also send your invoices on time. It will help them sort out their priorities in terms of budgeting.
Remember, there are others on your clients’ expense list. While they have the responsibility to pay you, it is also vital that you remind them by properly sending them invoices early on. Through the help of cloud-based systems, you can also streamline this process to have their invoices promptly sent.
Create Plans for Past Dues
There are seasons when late payments are inevitable, and developing a strategy for handling such will help you get through the collection in a less stressful manner and keep you organized through the process.
List down how you will contact them. Who else can you reach out to when your contact person is unavailable? Will they be charged late fees? If so, how much? What else are their penalties? Keep note of these for your team to follow.
Have written payment terms
Prepare a document that will elaborate on customer payment terms and have a copy sent to your clients. Next, schedule a virtual or face-to-face meeting to discuss the set terms, have them ask you questions, and assure them by addressing their concerns to establish clear terms between you and your client on how to go about the transaction.
Closely track invoices through automation. Get real-time updates on your receivables and collections using a cloud-based system, making it easier for our team to check your daily, weekly, and monthly transactions and keep our clients updated. Ensure a smooth cash flow as automation supports you on how to effectively manage your accounts receivables.
You can also pull up records fast with just a few clicks, and it also minimizes errors such as multiple encoding of your transactions.
Based on our third tip, lay out steps for contacting your clients regarding the collection of late payments, and calling them should be the first one.
Occasionally, an email for past dues is not enough as it gets buried in the other messages or updates your client receives. Take time to call your customers to remind them about their payables.
You may also take this opportunity to ask about their feedback on your services and have them suggest other convenient means for them to pay you back.
Convenient Payment Options
Provide convenient alternatives for your customers to send their payments.
Now in 2022, it is safe to say that we should consider using online payments for our transactions. Encourage your clients to pay on time by eliminating the hassle of going to the bank, and having the need to line up.
It also secures payments as it is directly sent and received in our bank accounts. After the transfer, both will receive real-time updates through text messages and emails regarding their transaction. Pretty convenient.
Prepare yourself for excuses
You may experience receiving the same reasons from different clients. Use them to create a list of frequently used excuses and research how to answer them. It will help your team prepare proper responses and overcome them.
Process transactions efficiently and influence your customers to adhere to set payment terms by sticking to the plans and rules you have laid out in managing your accounts receivables.
Aside from that, tracking the steps made will give you the advantage of determining what works best and do not, allowing your team to adjust accordingly.
Know when to end a customer relationship
We would not just want to end it, do we? But if your customer often forgets to pay you on time or fails to follow payment terms. You may want to weigh the risks, costs, and benefits of your relationship with the customer.
Even after your clients agree upon terms, problems may sometimes arise. If this happens to be the case, discuss the matter with them privately and come to an agreed-upon solution.
Determining the best way to tackle managing AR can vary on a case-by-case basis, but you will still be able to settle things with them in some way because of good communication. Getting receivables you’re due through a clear understanding of your respective expectations is one of the keys how to effectively manage your accounts receivables.
Incorporate proper bookkeeping, invoicing and billing procedures, and send regular payment reminders using Zayls. Organized data matched with accurate tracking ensure that you get paid by your customers on time.
Photo by Mikhail Nilov via Pexels