Here is what we suggest to our clients for help with A/R collections:
💡 Monitor your A/R regularly: Being proactive in business can mean the difference between being in the black or seeing red. One way to do this is by using built-in A/R reports especially designed to give you immediate information about who owes you money, how much and the aging on those invoices. Armed with this knowledge you can take action to collect your money more aggressively.
💡 Send statements monthly to customers who pay slow: sending unpaid statements has been reported to speed up payments on invoices because most people hate seeing these same reminders month after month.
💡 Send accurate invoices the first time: Few things will slow down your account receivables more than an invoice with errors. Customers who dispute charges usually wait until the due date and then get more days to pay them because it takes time to review and correct errors.
💡 Offer early payment discounts and assess late payment charges: How much are you willing to give up to speed up your invoice collection? That’s a balancing act which requires careful analysis. For millions of small businesses with big cash flow fluctuations, encouraging faster collections on unpaid invoices is a strategically effective alternative to keep the money coming, even at a cost. Conversely, assessing late charges and including them on customer statement reminders will often encourage faster payments.
💡 Input a credit threshold in a customer’s profile under the Payment tab so QuickBooks can automatically flag for potential bad debt losses. Once a customer has reached his/her credit limit, you can control or stop deliveries until payment is made. Customers who’ve been identified for “zero available credit” should have their names edited to “On Hold” until outstanding balances get paid off.
💡 State due date and late payment charges on all invoices so customers can’t be in the dark about payment due dates.
Whatever approach you implement in your A/R collections, make sure that you are doing it consistently. Be firm with your customers about staying within the requred terms but also be fair. Nobody likes to deal with an unreasonable company. We encourage all our small business owners to use a computerized accounting system like QuickBooks to help speed up and manage A/R and cash flow more effectively.
➡ Did you know that QuickBooks software is the #1 most popular accounting system for small businesses? To find out why, email us for more information using the form on this page.
Need help learning how to better manage your account receivables and speed up your cash flow? Call our experts for more information at (347)230-8450. Monday to Friday 9:30am to 5:30pm.