Sometimes it becomes difficult to manage accounts receivable as some retailers take long period to pay their vendors. Here are some tips to handle the issue.
FREMONT, CA: The worst thing that can happen in the business is to run out of cash. The pad of money you depend on to run your daily operations smoothly vanishes. For all the business owners, customers don’t pay them upfront. Without cash in hand, one won’t be able to purchase materials for new jobs, or even worse, you may be unable to meet payroll obligations.
Here are some tips for managing accounts receivable:
1. Check credit on potential clients
If a person plans to do business on a long term basis for expensive projects, they should check a client’s credit history to verify creditworthiness. As they are not banks, so they can extend credit as part of their customer service plan.
2. Offer payment plans
When the customer is ready to buy the service or product, ask their preferred mode of payment. Because it is different for different people as some may want to make installment payments or pay by check, cash, money order, or use credit/debit cards.
3.Track payments
Appoint a staff in every office to check by calling the customers whether they received a bill and remind them when it’s due. If after warning also the payment is not made just make a second call and tell them the expected date to make payment. Keep thorough notes in each customer file.
4. Add late payment fees
It is better to nudge the customers to pay on time by adding a late payment fee. It can be 1.5% interest or more on unpaid balances. For the very first time, if the customers don’t pay on time, inform customers by writing off late fees. However, don’t write late fees again if they continue to pay late.
5. Bill regularly
In a busy life, most of the people need reminders to pay their bills. There is a better way to remind them by just sending invoices twice a month instead of once. This process will bring an uptick in payments.
6. Give discounts
The other way is to give discounts to clients. If the client pays on time, some percentage of discount on the next purchase. Or just boost the discount percentage on their next order when they pay upfront or, for example, within five days.
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