Account Receivables are vital for any business, as day-to-day operations greatly depend on it. It is where you have to draw money to pay your employees, finance your company’s daily expenses, and grow the business which is why payments must be collected on a timely and regular basis.
Without the expected funds, companies are evenly forced to use money in their reserve that is highly intended for other purposes.
Businesses that declare bankruptcy usually have problems that root to an inefficient collection system, such that they had been unable to collect what the customer failed to pay.
As per the studies, one out of four small businesses experience difficulties in managing their accounts receivables because of customers that either short pay them, pay beyond the terms set, or simply not able to pay due to financial setbacks brought about by the slump in the company.
So, here are the 8 Account Receivables Survival Strategies In 2021
Evaluate Financial and Credit History
Before agreeing to do business with any company, do proper backgrounds check first on their financial and credit history? If required, ask for feedback from other companies they have previously done business with.
Most of the businesses always used to have a long list of unpaid credit, which is a good indicator that they may already be struggling with their company’s finances. It is on a good note to not to forge long-term arrangements with them until they have completely sorted their finances out.
With the companies that usually fall into the different patterns of late payments, consider offering terms that are feasible for them and still profitable to your company.
Make sure to set clarity on terms of different payment between your client and your company
Provide your customer with an estimate of expenses that they will incur negotiate an arrangement that would be convenient and efficient for them, which does not sacrifice your business profit.
Do Electronic Invoicing
Previously emails were sent to get invoices to the customer’s doorstep. Technology has made it possible for businesses to send invoices by email through apps that are being made available on the internet.
And there is no need to wait for the monthly cycle billings, as you can send invoices as soon as the projects are completed. Sending timely invoices can help customers prepare for the due date stipulated.
The good part is that most of the invoices apps have set indicators that reflect when customers have opened the email, which makes it more difficult for them to make excuses for late payments.
Outsource Management of Your Company’s Accounts Receivable
Every company needs its accounting functions to be managed efficiently and effectively to make sure business profitability. This is why Accounts Receivables (AR) outsourcing is the best option to take for most businesses.
Managing your company’s AR requires both consistent and regular reviewing and monitoring, as there are payments to input regularly and receivables to follow up.
You may not have the time or the adequate number of team to keep up with it and still take care of the other tasks that need to get done. By signing a partnership with an efficient Account Receivables outsourcing company, you can rest assured that someone who is trained and equipped to do the job is keeping a sharp eye on your transactions.
Provide Multiple Payment Methods
Delays of payment are mainly caused by the inconvenience of payment methods for your customers. To turn things around, add different options to the company’s payment system other than Credit Cards and PayPal.
Customers may find the electronic fund’s transfer system or bank-to-bank method of payment much more accessible.
Get a clear follow-up plan
Most organizations would love to contact their customers before 15-20 days past the due date. Moreover, in reality, that is a tough ask, especially in a manual environment that is strewn with bottlenecks. Automated Account Receivables solutions have a better way of doing it. Their slick payment reminder capabilities make sure that friendly emails are sent out automatically to notify slow-paying customers. No human intervention is necessary—even no manual headaches or hassles.
Evolve with your customers
You may have noticed that people nowadays look to prefer interacting with the small, glowing rectangles than the actual human beings. Your customers are no different. Apart from just speaking to a rep or getting put on hold, they would rather make an invoice payment or get a question answered online, often from their mobile device and on their own sort of time.
Think beyond DSO
Using metrics to improve performance is not a new or radical concept nowadays. But in the Account Receivables, besides “DSO” and “Amount Written Off,” the data analysis pool is laughably shallow. Account Receivables departments that find different ways to go beyond DSO are able to efficiently and effectively track performance, hold their teams accountable, and ultimately get the results that they usually desire.
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