Accounts receivable is abbreviated as the AR and it is also known as “receivables”. The accounts receivables can be described as the amount owed to a company by their clients or customers after delivering your products or services. The accounts receivables play a vital role in the growth and progress of the company. Therefore, they are classified as the to-ranking assets for any business.
The accounts receivables are responsible for maintaining the good cash position of the company. Therefore, all business owners should put in a lot of effort to improve their accounts receivable process.
The best way to improve the accounts receivable collection process is to invest in the ar collection software. Here, in this article, we are going to discuss various tips and tricks to maintain optimum AR collection process:
Quickly Send Invoices
The best time to send the invoices to your customers is immediately after delivering your products or services. If you send the invoices quickly then it will increase the chances of getting paid earlier. Well, you should not feel awkward about sending invoices quickly. After all, you are running a business and do not offer your products or services for free.
Sending invoices immediately will represent your company as diligent, efficient, and functional. You should not wait for preparing the invoices at the end of the month.
The delay in sending invoices will automatically reflect in collecting payments. If you want to send the invoices at right time, then invest in collections software that will automate invoice generation and sending process.
Send Clear & Simple To Understand Invoice
If you want to convey your message to your customers that they owe an amount to your company, then use easy to understand the language in your invoice. The consumers want invoices in simple language and accurate information.
The clearers and simple invoices increase the probability of getting paid before the deadline. Sending sloppy, vague, and incoherent invoices will not just slow down the payment collection process, but also leads to a bad impact on customers. You should use accounts receivable solutions to generate good invoices that are easy to understand for your customers.
Offer Simple Payment Channels
It is quite obvious that if your customers find it easier to make a payment, then there will be high chances that you will get paid quickly. Make sure that the payment channels that you offer to the customers are convenient and without various restrictions.
If the payment methods of your company are full of restrictions, then you should re-evaluate your payment channels. You should make sure that your customers are comfortable with the payment channels. Otherwise, they will get frustrated and choose your competitor over you.
Incentive For Early Payments
Just sending the invoice to your customer is not enough to collect the payments from the customers. Business owners should look out for the different techniques to encourage the customers for making payments. The best technique to encourage customers is by offering incentives for making early payments.
Another way to motivate the customers for making payment before the due date is by charging late payment fees. Make sure you mention the discount and late payment fee in your invoice.
Maintain Good Relation With Clients
You should take some time from your busy schedule and get to know about your clients can pay off. You should look out for different strategies to strengthen up your relationship with your customers. A good relationship with clients will help you to get timely and consistent payment.
The good customer relationship not just fosters the accounts receivable process, but also helps in leaving a good impression on the customers. You should always be polite with your customers and also treat them as they are the perfect client for their company. Never use harsh or rude language with your customers in any situation.
Create Accounts Receivable Aging Report
Another name for the accounts receivable aging is the accounts receivable reconciliation. The accounts receivable reconciliation is a process in which the report is prepared for those customers who failed to make payment. You can create this report with the help of accounts receivable management software.
In this report, the name of customers, the amount he/she owes to the company, and the length of time is mentioned. This report will help the business owners to get to know about the total outstanding amount that they have to collect from the customers.
Start Taking Follow-Up
Even after sending on-time invoices, offering an incentive for early payment or asking for late payment fees can not able to encourage some customers to make payment for the products or services they have received. With the help of an accounts receivable system, you can easily make a record of customers who failed to make payment.
You should make a plan to collect the outstanding payment by taking the follow-up. You should send the emails to the customers who have failed to make the payment.