Tips To Reduce Outstanding Accounts Receivables In Business
All business owners know the importance of receiving on-time payments from the customers. The delayed payments are quite frustrating and the follow-up is time-consuming. Most clients have reasons for the delayed payments like misplaced invoices, cash flow constraints, and forgetting the deadline.
Well, it is very important to have the right process in place to deal with the delayed payments. Here, in this article, we are going to discuss some tips and tricks to reduce the piling up of outstanding accounts receivables. Take a look at the following points:
1. Promptly Send Invoice
Some businesses take too long to send the invoices to their customers. But they don’t know it will leave a bad impact on their business. When the customers receive the invoices only then they will make the payment. If you delay the invoice sending process, then it will automatically delay the payment collection process.
Ultimately results in piling up of delayed accounts receivables. If you want to avoid it, then it is very important to send the invoices at the right time. If you will send the invoice sooner, then it will increase the probability of collecting payment soon.
The automatic accounting software can help in promptly and automatically sending the invoices. With Zuora Quickbooks integration with your system, it is possible to streamline the cash flow.
2. Set Clear Payment Terms
Invoice lack payment terms and condition indirectly gives unlimited time to the consumer to make payment. You should set clear expectations and mention all your terms and policies in the invoice.
Even the term “due upon receipt” gives unlimited time to the customers for the payment. Thus, it is important to mention the deadline for making the payment. Also, if you want to take charges for the delayed payment, then you should mention it on your invoice.
3. Send A Gentle Reminder
It is one of the most important steps that you need to consider to get rid of piling up outstanding invoices. Due to the hectic lifestyle, most customers forget to make the payment at the right time.
Therefore, it is important to send a gentle reminder at the right time. The gentle reminder trick will help you to reduce the outstanding payments. It is a very simple and effective way to streamline the cash flow in your business.
4. Quickly Initiate Action
You should quickly initiate action after passing the due date. The timing for this action is different from one company to another. But, if any payment is delayed by a week after the due date, then it is the right time to take the follow-up action. The short email can serve the purpose and help you collect the delayed payments from the customers.
Make sure that your email contains all important details like the invoice number, due amount, due date, and the copy of the original invoice. No matter how much frustrated you are, it is important to write a professional email and use polite language.
5. Make A Phone Call
Sometimes, people change their email addresses and there is a probability that they have not received the emails that you have sent to them. Thus, it is a good idea to switch to a phone call. With the help of a phone call, you can personally connect to them and find the reason for the delayed payment.
Make sure that the phone call is courteous and professional. The person who is going to make the phone should not be angry or frustrated. Not all delayed payments are intentional because sometimes people forget to pay the amount due to a hectic schedule. You should give them another deadline.
6. Start Further Interactions
Further contact with the customers can also help to reduce overdue payments. We recommend you listen to the causes for the delayed payment. While interacting with the customers, you should record the conversation. Also, you should make a record of the email conversation.
With the help of AR collection software, you can easily make a record of every conversation. These records will help you to find the right time to move towards the third-party collection. But you should not wait too long for the payment because it can lead to loss to your business.
You should follow the above-mentioned tips to streamline the cash flow. The contacts that you will establish with the customers will help you to quickly collect the payments from them. You should politely talk to them when the payment is delayed.
Also, you should try to find out the reason for the delay. Sometimes, payments are delayed because the customers do not have much time to visit the office for making payments. By offering different payment options, you can encourage your customers to make payments on time.