Looking after your Accounts Receivable.Posted on
Did you know that one of the key reasons small businesses fail is that they neglect their accounts receivable? Running a small business is hard enough; looking after all the details that bring back repeat business and help generate sales is a constant work in progress.
Small business owners are always busy looking for ways to attract new customers, and to keep current customers happy, and coming back.
Some small business owners feel that chasing customers to pay their bills will turn them off and ruin their relationship. Nothing could be father from the truth. The longer a client can get away without paying their bill, the less likely it is that they will pay their bill. On another note, your active efforts in collecting what you are owed, shows your customers you are serious about the success of your business and sends a signal that they won’t be able to get away with taking advantage of you.
Here are few tips to get your customers to stay current with their payables;
Create an aging report that shows outstanding invoices, history of payments and average days to pay so that you can get a feel of how a customer pays their bills.
Do not wait to ask them for your payments. If the terms are net 30 days on your invoices, then on the 31st day the customer should be advised their account is past due. Constantly remind them they are in arrears and need to bring their account up to date.
Another possible tool to help provide an incentive is to offer a discount for early payment. For example, 1% – 2% if paid in ten or 15 days.
Lastly, you can discuss with them a payment plan to repay their outstanding invoices. Any future sales should be COD, so you just do not end up taking on more debt from that customer.
If you have exhausted your options, and still have no results to show for your efforts, then it may be time to send the debt to collections or look at obtaining legal help in getting your money. Do not feel guilty. This is your money, it is due to you, from product you have sold to your customer, or services you have provided. This is the bread and butter of your business and customers who are not paying their bills, are putting your business at risk.
You might consider consulting a Paralegal. Paralegals are a cost-effective way for you to collect your money. Sometimes all that is needed is a little nudge via a strongly worded letter, and a few follow up calls to motivate your customer into paying their invoice. Wide Eye Paralegal Services can help you in collecting those outstanding debts. We will pursue your debtors to recover what they owe you and to settle the matter as quickly as possible. Put Wide Eye Paralegal, to work for you.