Mismanagement of receivables is one of the top reasons why businesses run into cash flow issues. If you invoice your customers, you must have a solid plan for collecting those invoices and ensuring they get paid. This can be hard to do, but here are some tips and tricks to help make managing receivables easier.
- Help Customers to Make Payments
You should always work with your customers to ensure their invoices get paid. Keep communication open. If a customer has a problem paying, make sure they know they can contact you and that you are willing to work with them on it. It is much better to get a late payment than no payment at all. Of course, you don’t want this to become a widespread habit, so always be ready to walk away from a customer who doesn’t like to pay on time.
- Have a Solid Collection Plan
If invoices are overdue, you should have a good plan in place to collect on them. This could involve a collection agency or simply issuing collection letters on your own. Make sure you have a time limit on how long you will try to collect before writing off the debt. Also, make it clear to customers what will happen if they default. You shouldn’t be afraid to lose business because a customer that doesn’t pay isn’t really worth your time anyway.
- Make Invoice Terms Clear
You should always make it clear upfront how your invoicing process works. Let customers know when they will be billed and how long they will have to pay. Also, let them know about collection processes. Be clear about what happens if they default.
- Stay on Top of Things
You should always know when invoices are due and what has been paid and what has not been paid. Have a solid system for tracking payments and invoice due dates. Make sure you are following a clear plan when dealing with invoices so it becomes second nature. This will help you to avoid overlooking anything or missing overdue payments.
- Know When to Get Help
Sometimes tracking and managing invoices can be too much for just a business owner to handle. You should pay attention to how managing receivables is affecting your ability to manage other areas of your business. If it is starting to have a negative impact, you might want to consider getting outside help to handle your receivables.
Following these five tips and tricks should help you to develop a solid plan for handling your receivables. Remember that getting the money owed to you is important, so managing receivables is a vital part of your business. Staying on top of this business aspect will help ensure your business keeps running smoothly.