In today’s economy, unpaid and overdue invoices in the business world are a growing reality. For most businesses, this is a nightmare because a few unpaid bills can leave a business’s cash flow seriously hurting. While it is often easier said than done, creating a strong internal process for the collection process can significantly increase your chances of getting paid.
Use the following as guidelines as you generate your internal document:
Continuous Communication and Monitoring
Don’t expect payment if you don’t know what is going on with your client and their business. Make an effort to regularly communicate with all clients throughout the year; not just when their invoice is due. This can include company newsletters, visits to their office and calls or emails prior to the due date as a friendly reminder. If the client does hit financial troubles, typically they will be more inclined to pay invoices that they have wonderful working relationships with.
To keep you away from past due invoices, you should always set up credit monitoring for your clients. That way, you will be more aware of warning signs before an order is placed. To learn more about credit monitoring, visit our recent post: http://c2cresourcesblog.com/c2c-resources-commercial-debt-collection-agency/credit-monitoring/.
Clear Payment Terms
Always be clear with your payment terms at the time your services are retained. Sometimes that can be where the confusion lies between your accounting department and the client. Much of these problems will be fixed if you maintain continuous communication with the client throughout the year and follow-up on invoices prior to the due date.
Your payment terms could also be slowing the payment cycle down and getting in the way of payment. To learn more about writing payment terms that encourage payment visit: http://c2cresourcesblog.com/in-house-collection-procedures/payment-terms-slowing-payments/.
At the end of the day, you need to remove all of the obstacles in the way of your client paying to increase your receivable conversion rate and increase your cash flow.
Check out our blog on removing 11 obstacles to keep your customers paying.