Cash flow is an essential component for the success of any business. Realising timely payments from customers can be challenging, especially when the market is sluggish. In addition, businesspersons often deal with delinquent accounts and are well aware of the struggle to squeeze money from such accounts. When organisations receive late payments, they will automatically delay payment to vendors or suppliers, and disruption will occur at the production level. To avoid these situations, business persons must follow some tips to get their customers to pay on time. Read on to know about some tips to boost your accounts receivables.
Effective Tips To Boost Accounts Receivables In 2022
Accounts receivables refer to the money yet to be received by the seller for the goods or services provided. Accounts receivables are represented as an asset account on the balance sheet. Individuals involved in business can follow the tips mentioned below to quicken accounts receivables.
Generate Unambiguous and Accurate Invoices
Different industries have different payment terms, and the best practice is to follow the industry-specific standard payment terms. If organisations offer different payment terms, they must mention the same to customers.According to a recent study by Xero, customers (irrespective of industry) usually make payment 14 days later than the said date. Therefore, if a businessperson is expecting payment within 30 days, they must mention the invoice payment date within 15 days and send prior notification.
Offer Small Incentives For Early Payments
Individuals can offer financial incentives to customers for making early payments. Customers always look for ways to save money. When they see organisations offering early payment incentives, they will most likely grab the offer. This kind of practice encourages customers to make early payments. On the other hand, if organisations give customers the option to pay penalties for late payments, some customers will still delay payment because they can benefit by paying low penalty charges contrary to high credit card charges. Organisations need to choose the best practice.
Efficiently Handle Past-due Receivables
Along with handling new accounts or invoices, organisations must focus on accounts that are due for a long time. The longer an organisation waits, the higher are the chances of not realising such payments. Here, businesspersons must contact them personally or by email or phone and keep doing so until they make payment. In addition, they must stop providing supplies, i.e., goods or services, until customers clear all dues.
Set Reminder Emails Timely
Another effective method of receiving timely payment is sending reminder emails to the customer before the due date. In this fast-paced world, missing payment deadlines is common both at B2C as well as B2B level. Hence, organisations can set auto-reminders and send these emails to their customers 10, 7 or 2 days before the due date. Customers often do not mind these types of reminders as this helps them avoid unnecessary penalty charges.
Send Invoices Timely
If organisations delay sending invoices, it creates a misconception among customers that those entities have relaxed payment receiving structures or high tolerance towards slow payment. Organisations that depend on the manual generation of invoices often cannot create the required number of invoices for a particular time. In addition, chances of erroneous invoices are there while handling numerous invoices manually. Here, business persons can avail accounts receivables management services from KredX. This online platform facilitates automatic processes from customer onboarding to collections.
Getting timely payment and proper accounts receivables management is essential to maintain cash flow as well as workflow. Suppose the business struggles to take out money from their customers or frequently deals with delinquent accounts. In that case, they must change business approaches, such as opting for an automated process and following effective tips to boost accounts receivables.