Collecting on invoices can be difficult, but for obvious reasons, it’s not an aspect of your business that can be ignored. Unfortunately, many businesses make these accounts receivable mistakes, costing their company precious time, resources, and capital. Understanding these mistakes, however, is the first step to solving the problem.
Early in the sales process, it can be easy to overlook a client’s credit profile, especially if your business desperately needs the account. However, taking unnecessary risks with clients who have a poor credit history or over-extended credit limits could lead to collection troubles in the upcoming months or years. A sale might make your books look fantastic, but if you can’t collect, your business will suffer.
When an invoice comes overdue, someone on your team needs to contact the customer immediately. You can’t just assume they conveniently forgot and will pay tomorrow. You need to take proactive steps that will increase your chances of getting paid. An email won’t hurt, but in all reality, you need to contact your client over the phone and speak with someone who has the authority to ensure your invoice is paid quickly. As a proactive measure, it may also help send reminder emails about upcoming due dates, say five days before the invoice is due.
The most successful businesses make it as convenient as possible to pay for their goods and services. Why do you think fast-food places accept credit cards at the drive through? The more ways to pay, the more likely you are to get paid, so make sure your clients have the option to pay online. If you only accept paper check, you are simply creating barriers between you and your money; it might be hard to implement at first, but adding online payments could reduce invoicing time significantly.
There are many important aspects of your business, what’s more important than getting paid? If you are struggling with accounts receivables, it’s essential to the health and viability of your business that you seek help immediately. Perhaps you need to expand your invoicing department or create a full-time position that deals with accounts receivables, or perhaps it’s time to seek outside help, such as an accounts management firm or an invoice factoring service.
If you need help with your accounts receivables, TCI Business Capital can help you avoid these common accounts receivable mistakes.
If you’d like to learn more about how TCI Business Capital can help with your accounts receivable process, give us a call at 800-707-4845 or fill out the form below.