Monday, September 14, 2015

How to Handle Accounts Receivables More Efficiently

There’s nothing worse than making a sale...and then not receiving the money that you’re owed. However, many businesses couldn’t survive without allowing sales on credit, so this risk is pretty much impossible to avoid. If you’re one of those businesses that just has to put up with this risk and with delinquent clients, it is absolutely imperative that you have a good, workable accounts receivable system in place to keep track of money that is owed to you, your contact with delinquent clients, and any partial payments you receive on delinquent accounts.   

Fortunately, there are several tools and tips that can make managing accounts receivables easier. One great tip, for example, is to do a thorough background and credit check on clients before you allow them to buy anything on credit. If you see that a client has had lots of non-payment issues before or debts that have been settled in court, you’ll probably want to avoid extending credit to that person or at least limit the amount of credit you do extend.

It’s also very important to get your financial agreement with the client in writing! Include the full payment terms, the conditions, and what actions you will take to collect if the client doesn’t pay. Signing this agreement doesn’t always ensure that people pay when they’re supposed to, but it does serve as proof that the client agreed to pay in the first place and that he knew exactly how much he was supposed to pay.

Once all the basic paperwork is in order and credit has been extended, make sure you stay in close, regular contact with your clients! Contact them when their payments are due, and send them reminders in the mail or by email. This will help the client to remember his commitments and to establish a good relationship with your business. Of course, you may have to escalate these conversations from “friendly reminders” to flat-out “demands,” but if you follow these tips, there’s a good chance that the majority of your accounts will never get to that point.

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