What Are The Best Practices For Managing Accounts Receivable

The accounts receivables are just like an asset for the company. If your business gets timely payments from the customers, your business will start growing. On the other hand, if you fail to manage the collection of due payments from the customers, then it will lead to a bad impact on your business. Thus, we can say the process of accounts receivable management can make or break your business,

If customers delay in making their due payments, then you will face a cash flow shortage in your business. You will not be able to buy necessary raw material to continue the products also not able to make payment to suppliers and employees. The optimum accounts receivable management will help in maintaining continuous cash flow and prevent the business from bankruptcy. Accounts receivable software integration with your backend system is one of the good methods to receive timely payments.

Here, we are going to discuss the best practices for managing accounts receivables efficiently:

1. Avoid Extending Credit To Just Anyone

If you are going to extend credit to your new customer, you should check his or her credit history. You should run a credit check so that you can determine whether this customer is going to pay the due amount before the deadline or not. Most of the corporate clients have their credit accounts and they are ready to share the references. You can better manage the receivables by implementing ar integration for quickbooks or your company’s ERP software.

2. Ask For Personal Guarantee

If you are going to do business with a corporate customer, you should not be afraid of asking for a personal guarantee. You should ask for a specific person who will be responsible for handling the payments. The responsible person will be accused if the corporate client failed to make payment at right time.

3. Written Payment Terms

You should ask your new customer to sign an agreement in which all payment and business terms will be mentioned in the written. You should also precisely mention the due date for payment along with the late payment charges.

4. Immediately Send Invoices

Mostly, customers want to pay at the right time, but delayed invoices lead to delayed payments. Thus, it is recommended that you should send the invoices immediately after delivering products or offering services to your customer. The key to maintain the optimum cash flow in your business is sending invoices promptly. All business owners should create a process to send the invoices to the customers at the right time. One of the best ways to streamline the process of sending invoices is by investing in accounts receivable technologies. 

5. Provide Simple Payment Options  

Some customers are not able to make payments because of difficult or old-style payment options. Thus, it is recommended that all business owners should allow their customers to make payments through different modes. You should let them make payments through debit cards, credit cards, or online payment applications.  

6. Keep Track of Payments

If you want to know those customers who always delay in making payments then you should keep track of payments. It is possible by investing in good accounting software. The latest technology accounting software will not just let you keep a record of everything, but also help you to automate various accounting processes. Troveworks Quickbooks integration app is one example of accounting software or the latest accounting technology that will help you to maintain the record of payments. 

7. Strictly Follow The Rules

You should strictly follow the rules for managing the accounts receivables in your business. You should not be lenient with those customers who always make excuses for delayed payment. You should immediately take strict actions according to the policies of your company. By taking strict action against these customers, you will not just be able to manage your accounts receivable efficiently, but also give a warning to other customers that timely on-line payment is necessary.

8. Call Your Customers

When your customers delay in paying the due amount, you should immediately send a follow-up email. If you do not get a positive response even after sending an email, then you should call your customers immediately. You should call them to remind them about the overdue payments. You should try to find out the main cause of delayed payment. Also, keep a record of this conversation with the help of accounts receivable portal. If you do not receive the due amount after calling, then call them again.

9. Know When to Quit a Customer

There is no profit to continue doing business with those customers who always delay in making payments or who do not pay their overdue amount. The business owners should know the right time to quit these customers.