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Tips for Getting Paid on Time

Money
Contributed by : Mukesh Makker

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Have you found that collecting on your accounts receivables has become more challenging? If so, strengthening your collection procedures may allow you to improve collection rates and shorten the aging days of your accounts receivables. While some tips discussed here may not be suitable for every business, most can serve as general guidelines to give your company more financial stability.

Define Your Policy. Define and stick to concrete credit guidelines. Your sales force should not sell to customers who are not creditworthy or who have become delinquent. You should also delineate what leeway salespeople have to vary from these guidelines in attempting to attract customers.

Tip: Have a system of controls for checking out a potential customer's credit in place before shipping an order. Furthermore, there should be clear communication between the accounting department and the sales department as to current customers who become delinquent.

Explain Your Payment Policy. Invoices should contain clear written information about how much time customers have to pay and what will happen if they exceed those limits.

Tip: Make sure invoices include a telephone number and website address so customers can contact you with billing questions. Also include a pre-addressed envelope.

Tip: The faster invoices are sent, the faster you receive payment. For most businesses, it's best to send an invoice with a shipment, rather than afterward in a separate mailing.

Follow Through on Your Stated Terms. If your policy stipulates that late payers will go into collection after 60 days, then you must stick to that policy. A member of your staff (but not a salesperson) should call all late payers and politely request payment. Accounts of those who exceed your payment deadlines should be penalized and/or sent into collection, if that is your stated policy.

Train Staff Appropriately. Apprise the person designated to make calls to delinquent customers of the seriousness and professionalism required for the task. Here is a suggested routine for calls to delinquent payers:

Become familiar with the account's history and any past and present invoices.

Call the customer and ask to speak with whoever has the authority to make the payment.

Demand payment in plain, non-apologetic terms.

If the customer offers payment, ask for specific dates and terms. If the customer does not offer payment, tell the customer what the consequences will be.

Take notes on the conversation.

Make a follow-up call if you still haven't received a payment and refer to the notes taken as to any promised payments.
Need help tightening up your credit and collection policies? Help is just a phone call away!


About Author
Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.


Website: https://taxmaker.com/newsletter.php#2

 

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