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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