It’s no surprise to anyone to hear accounts receivable is a big task. It causes plenty of headaches for businesses of all sizes, in all industries. Yes, it can be a pain, but it’s also the lifeblood of your organization! If you’re not managing it well, you’re probably setting yourself up for trouble later on down the line.
For this reason, accounts receivable management should be at the top of your list of priorities. If you want to manage the process optimally, employ some (or all) of these five methods.
1. Investigate Customers
Sometimes, the best defense is a good offense. This is as true in managing accounts receivable as it is in sports. In this case, you want to look at your customers and carefully vet them when they apply for credit with you. You need to ask whether or not you should approve the customer for an account.
This can save you trouble down the line. If you’re careful with who you approve for credit, you probably won’t run into as many problems as if you simply allow anyone and everyone to open an account with your firm.
2. Be on Time
You want your customers to pay you on time, so be sure you’re sending them bills and invoices on time too. If you’re late, not only is it unprofessional, but your customers will likely take it as a sign they can pay late too.
While it can be difficult to be on time—in part because accounts receivable management is one of those tasks that can so easily fall by the wayside—the better you become at getting bills and notices out quickly, the more likely customers will be to pay on time.
3. Follow Up
Much like sending out your invoices on time, you also need to follow up with customers in a timely manner. If they haven’t paid their bills ten days before it’s due, maybe send them a friendly reminder. Chances are they’ve forgotten; your customers are busy people, just like you!
If a bill becomes overdue, be sure to follow up in short order. Again, your customers are busy people and sometimes things simply fall by the wayside; they’ve probably been meaning to pay their bills, but it might have slipped their minds. A quick reminder will often resolve the issue.
4. Enforce Credit Policies
If you have credit policies, be sure to actually enforce them. Late penalties should be applied, even if it takes you more time to figure out what the interest is. If you have an early payment policy, which gives customers a discount, be sure to apply the discount when the customers do pay early—it will encourage them to pay early each and every time!
Some businesses have credit policies, such as late penalties, which they do not effectively enforce. If your customers find out you’re not enforcing your own policies, or not enforcing them across the board, they may cry foul—and they’ll be more likely to abuse your system.
If you’re having trouble sending out invoices on time, or you just don’t have the time to follow up with your customers about their bills, consider getting some extra help with accounts receivable in the form of a third-party partner.
There are plenty of companies out there who can help you manage your process more effectively. They have expert staff and access to the latest technology, which means you benefit from a better, more efficient process.