A well-organized accounting and billing system is key to keeping accounts current. There are many components that make for a well-oiled machine. The better you manage each component, the more you can minimize late payments and collect on bad debt.
Step 1: Use a Credit Application.
A good Credit App puts your basic terms front and center for your customer and provides a way for them to agree to those terms on paper. This provides a solid reference point for your expectations and how you intend to do business with your customer.
Step 2: Obtain Purchase Orders From Your Customer.
PO numbers (when applicable) help to prove an order was placed. They help tie statements and invoices together thereby expediting payment.
Step 3: Invoice Accurately, Consistently and Promptly.
When your invoices are accurate, consistent and prompt, you’re helping to establish in your customer’s mind the expectation that HIS payments will also be consistent, accurate and prompt.
Step 4: Keep Copies of Delivery Documents.
This may not be applicable in every situation, but if it is, having a file with proof of delivery documents can help you in the event that a client later attempts to refute a delivery.
Step 5: Document Changes to Amounts Due.
By tracking adjustments with credit and debit memos, you’re eliminating the need to remember agreements, while creating a paper trail at the same time.
Step 6: Use Change Orders.
When your customer requests a modification to an order, document it with an official form to authorize the change.
Step 7: Send Regular Statements.
Consistent reminder statements work in much the same way as advertising. They keep your invoices top of mind for your client.
Good billing practices will support your claim when issues arise with a non-paying client. Each piece of documentation can play an important role in getting you paid especially if you are forced to take a collection action.