As entrepreneur of small business establishment, it may find it difficult to get your clients you pay their dues on time. Even at the end of accounting period, you may realize that half of the invoices that you issue to your customers for the products you have been successful in selling them remain unpaid even after 90 days. If this situation continues in the long-run, you may face problem paying your suppliers, employees and incurring expenses. In the worst-case scenario, you may have to withdraw money from your personal savings or take short-term loans from commercial banks to tide over the crisis.
Leslie Hocker – Simple tips to improve your account receivable position
Experts specializing in the field of business and finance point out the following effective ways that can help you to improve your organization’s accounts receivable position:
- Try electronic mail(email)
When it comes to find ways to speed up your establishment’s invoicing process, you could opt to send this bill via email to your customers as soon as you make a sale. It ensures that the requisite party receive this document almost immediately. Moreover, you should request your clients to send their email addresses as soon as you are successful in making a sale. This prevents them from justifying their late payments on not receiving their invoices on time.
- Shorten the payment terms
The most important advantage of using email to send current invoices to your clients whenever you make a sale is that it allows you to reduce your organization’s payment terms. Traditionally, most businesses would allow their clients to repay their dues within a period of 30 days because of unavoidable postal delay. However, Leslie Hocker, an international marketing director from Huston,says that now you request your customers to pay their outstanding dues as soon as they get their invoices rather than wait for 30 days.
- Maintain cordial working relationships with your clients
Experts says when you maintain a positive and cordial working relationships with your customers, they are likely to make prompt payment. Even when these people face a cash crunch, they usually have a tendency to prioritize on organizationsthat go out of their way in maintaining positive business relationships with them. This is why you should strive to maintain strong relationships with your customer to avoid getting late collection.
- Accept multiple payment modes
If you want to ensure your customers pay their dues on time, offer them multiple modes of repaying their debts. You could accept payments via plastic money, checks, electronic fund transfer(EFT)or PayPal rather than just cash.
- Chalk out credit policy
If you have been maintaining positive business relations with your key customers for years, offer to sell your products or services to them on credit. However, ensure that the payment period is not too long as you may end up straining your cash flow position. Before taking such a step, conduct a thorough background check on their creditworthiness and ensure they pay their dues promptly.
Maintaining your business organization’s accounts receivable go a long way in ensuring it operates smoothly in the marketplace. Leslie Hocker says it is critical element in improving your business’ cashflow position and profit potential. It also acts as catalyst in enhancing your working relationships with your customers.