Collect Accounts Receivables

Some Strategies for Collecting Accounts Receivables

If you are like many small businesses, even a few late payments on your accounts receivable can cause you serious problems with cash flow. It is very important that you take systematic steps to limit the number of past due accounts that you have at any given time. The best strategy is to have a system in place that limits the number of accounts that reach a past due state in the first place. There are numerous tools and strategies for doing just that.

Here are some tips that will help you to reduce your outstanding receivables:

· Address the issue as soon as possible. Never wait more than a few business days past the due date to contact the customer. This allows for mail delays, but is early enough to catch a situation before it gets worse.

· When you contact customers, don’t give them an excuse. Don’t ask if they received the invoice as you are giving them the option to lie and say no. Instead, ask them, "When did you send your payment?" If they tell you it hasn’t been sent, then ask them when they intend to send it. Try and get a commitment from them and follow up if the commitment is not honored.

· Ask your customers why they haven’t paid up and if they are honest with you, you should treat them with the utmost respect. Many businesses have cash flow problems from time to time and if you treat them fairly, they will remember you long after their problems are over and they are looking to purchase products or services that you offer again. As a matter of fact, proper etiquette when collecting could not only result in you getting paid more quickly, but can also allow you to keep them as customers for life.

· If you get an excuse, don’t get emotional, instead address the situation logically. Try and get a definitive commitment on a date or time frame for when you can expect to receive payment. Make sure you are in agreement, so that there can be no claims of misunderstanding later. Find out how and when you will be paid (mail, credit card, etc.). Keep track of your conversation in a file so that you can follow up immediately if the commitment is not honored.

· If your customers gives you a good reason such as "My product was defective", then try to remedy the situation, as soon as possible. For example, if you find that the product was actually defective, make certain that a new, defect free product is sent out immediately.

· If the customer is a larger company, understand that they may pay their invoices on a set schedule. You will need to know when your invoices should be received in order to be included in their weekly, bi-weekly, or monthly payment cycle.

These are just some of the many proven steps you can take to collect your receivables once they are past due. To limit future problems with past due accounts receivables, you should look at your entire process. To compete in business today, you will almost certainly have to have some level of credit for your customers. The key is to limit it to those who will pay you!

And don’t forget, using Past Due stickers from the Canadian Label Company really help and at just pennies each they are a very cost-effective way to get the job done!