The word receivable stands for the amount of payment that a business is yet to receive. Accounts receivable forms an essential part of every company’s assets and concerns the inflow of cash into the company’s accounts.
Many small business firms extend credit facilities to their customers in hopes of developing better relationships with them and turning them into a loyal client base.
For small businesses, not receiving their due could have major negative impacts. Due to the failure of payment, many SMBs are even forced to shut down because they lack the funds needed to keep functioning. Thus, you need to ensure that your organization is receiving all its dues in time.
In order to make this possible, you need to optimize your company’s account receivables process. Generally, the process of collecting receivables is very time consuming and stressful. The reason we have put together a list of measures you can undertake to simplify and improve your organization’s accounts receivables process:
Research about your clients
The foremost step in managing your accounts receivables is to know your clients inside out. Every time you deal with a new client, run a thorough background check on them. Dig every little detail about their credit performance before you offer them credit. If you have even an ounce of doubt that the client might not pay the dues on time, put a full stop, right there.
Also, while dealing with regular clients, ensure that they have paid all their previous receivables before proceeding with new dealings.
Email Invoices to your clients
In many cases, it is found that due to mismanagement, clients forget about paying their dues. To ensure that this does not happen with you, send out emails to your clients at regular intervals, reminding them about the due date and the amount that they have to pay. Doing this will ensure that your clients don’t forget about your receivables.
However, sending out emails at regular intervals, to various customers, can be very time-consuming. You can thus automate this process to increase efficiency and save time for productive activities. There is a list of softwares available on the internet that offer you these services, read about their pros and cons and pick your best bet!
Be clear about your terms of payment
It is often seen that a company has failed to get its receivables because there was confusion about the terms of payment between them and the client. To avoid this, be clear about your payment terms with your customers right from day one. Before finalizing the transaction, make sure that they have clearly understood, and are on board with, your organization’s terms. It is best to have the payment terms checked by a lawyer to avoid any legal anomalies. Once your lawyer has checked and cleared the terms, provide a hard copy of them to all your clients.
Offer Various Payment Options
Electronic payment forms are becoming increasingly popular as the mainstream form of making payments. Businesses are widely accepting services such as PayPal as they make the payments process easier than ever. Credit/Debit cards, bank account transfer is another quick and easy way to accept payment. Data suggests that almost 37.2 percent of firms believe that an immediate payment platform can facilitate smoother day-to-day operations.
Apart from the traditional methods of accepting cheques and cash, avail all the modern forms of payments a well – so that the mode is at least not the reason why you can’t see the credit in your account.
If you don’t have the leisure to include all of the available options, make sure that you are aware of how most of your customers prefer to pay so that you can at least include those options as the primary method of receiving payments.
Hire a Collection Agency
After all these steps are executed, there are a few debtors who still refuse to respond to your calls/emails. In this time of crisis, it’s time for you to knock the doors of the experts and seek their services. I meant international debt collection agencies. These agencies are well trained to collect your dues from clients who refuse to pay up.
In fact, there are a lot of organizations who have shouldered the tiresome debt-collection to these expert agencies. It not only saves their time but also offer them better returns on the resources spent.
When maintained regularly, managing accounts receivable should not be a difficult task. Use these tips to manage your company’s accounts receivable more efficiently.