Accounts receivable is one of the most critical components of any successful business. Proper management and collections of accounts receivable are necessary for success and business growth. Adequate oversight of accounts receivable will recognize cash flow problems to prevent a negative impact upon your business. Additionally, collecting your accounts receivable allows your business to meet payroll, loan obligations, rent, and vendor payments due.
Review Your Accounts Receivables
The first step to ensure proper management of accounts receivable is to determine the status of all payments for all accounts. If your business is shut-down or slowed-down during the pandemic, then this can be a good time for you to review your accounts receivables. Utilize accounts receivables reports to track and measure the payment status of all your clients. Being informed of outstanding payments due and delinquent invoices can help you be proactive in the methods of your collection, preventing non-payment of invoices. Be proactive and not reactive when it comes to unpaid invoices.
Policies & Processes
Institute policy on late payments or penalties and follow through with friendly reminders of any fees that may be imposed for non-payment. Clients are more likely to submit timely payment if they have a clear understanding that not only will a late charge or penalty be imposed, but that your business is consistent and follows through with your policies.
Establish collections processes to ensure delinquent accounts are promptly addressed with active collections efforts. Even if you feel that your clients/customers would not be able to pay you during the pandemic, it is a good idea for you to stay in touch with them and let them know that you will work with them during these difficult times. Typically, the longer you wait to collect upon an unpaid balance, the less likely you are to recover. If you don’t keep in touch with those who owe you during the pandemic, then you will be very low on their priorities to pay you when they’re able to start paying back their debts.
Depending on your product or services offered, give thought to and take steps to diversify your clientele. Having large and small businesses as well as individual clients from various industries can help if a particular industry is adversely impacted by a slow season or downward market. By diversifying your clientele, you can ensure that if one client is having financial troubles, your other clients are still able to pay your invoices ensuring your cash flow continues.
Complete a thorough review of your invoices to ensure that your clients can easily understand amounts due, invoices accurately reflect any late fees or penalties incurred, and the methods available to submit payment. If you receive feedback from multiple clients that your invoices are difficult to understand, use that feedback to make changes. Make it easy for clients to submit payment by check or online.
Ensure your invoices clearly state where to mail payments and all information necessary to submit an online payment. Ensure that your online payment system is user friendly. Additionally, ensure that your billing software communicates and updates in real-time so that payments received are correctly credited and up to date at all times. Doing so will ensure that you have accurate figures for your accounts receivable reports and you are up to date on any potential cash flow issues.
It is also imperative that you develop a relationship with your clients through open person to person conversations. Utilize your salespeople and customer service representatives to build a strong relationship with your clients. These relationships will assist you long term in building your business as loyal customers will recommend you. Having a call with your client who is unable to pay will give you insight on what difficulties your client is having. You can then create a proper remedy to ensure you get paid, and you can make informed decisions about how to avoid recurring non-payment issues with this client. By having conversations with your clients, you can know when their peak and non-peak seasons are and thereby thwarting potential non-payment issues.
Seek Professional Collections Help
Using this time now to create a collections plan will assist you in collecting your accounts receivable, especially when the economy resumes. This includes having legal counsel who will assist you in collecting your accounts receivable. Our Collections Law Firm works methodically to collect unpaid balances for our clients with high success rates of recovery without incurring litigation fees. Also, we will give you insight on how to streamline your collections process and assist you in creating a process that optimizes successful collections.
Contact us to obtain additional information on how we can help collect your delinquent accounts.
About Andalman & Flynn Collections: For decades, businesses and professionals have been turning to the experienced collections attorneys at Andalman & Flynn for their debt recovery needs. A licensed collections agency, their experienced team successfully navigates the complex laws surrounding debt collection practices. The firm combines cutting-edge technology with savvy, effective debt resolution methods that result in high success rates and fast recovery times. For more information, please visit www.andalmanflynncollections.com.