KPM

Assessing Customer Credit QBI Deduction Cash Withdrawal Small business retirement Spouse travel expenses Accounting Software Strategic Planning Process Insurance Schemes Enterprise Risk Management Program Account-Based Marketing Wrong Software For Your Organization Operational Review Internal Benchmarking Reports Sales approach Capturing Data Older Workers Pooled Employer Plans Financial Statement Options BOI Reporting Rules Privileged Users Medicare Premiums DOL Business valuation Trust Fund Recovery Penalty Value-Based Sales Fringe Benefits Green Lease Strategic Planning Financial Reporting Marketing Strategy Succession planning health care benefits Cyberinsurance PTO Buying Media Screening Pipeline Management Billing Best Practices Solo 401(k)

Five Ways to Speed Up Collections

Turning receivables into cash is among the most important things a business must do. Of course, it is easier said than done. Here are five ways to speed up collections:

  1. Streamline the billing process. You cannot collect what you do not bill. Invoice customers promptly — as soon as the product ships, if possible. Or, if your company provides services, track billable hours daily and bill monthly; or as often as permitted under the customer’s contract. Implementing an electronic payment system, or upgrading your existing one, may accelerate invoicing and enable faster receipt of receivables.
  2. Reward early birds and penalize procrastinators. Enticing customers to pay before the due date may require early-bird discounts, such as a small percentage off bills or value-added perks for those who pay on time or improve their payment histories. Conversely, you might consider assessing fees on past-due payments. However, many companies decide to waive late charges as an act of goodwill when customers immediately resolve outstanding balances.
  3. Take a multifaceted approach. A variety of strategies, rather than a single phone call demanding payment, can yield better results. Courtesy calls may allow you to more quickly discover discrepancies (such as wrong addresses) and settle disputes. Payment plans can help distressed customers catch up on overdue accounts, and promissory notes can help prevent future billing disagreements.
  4. Minimize risky business. Before conducting business with anyone, review a prospective customer’s payment history, references, and credit score to assess ability to pay. Poor credit should not necessarily stop you from providing products or services to a customer, but be prepared to alter your typical payment terms when dealing with high-risk buyers.
  5. Look for outside help. If late payments become a serious concern, third parties can offer assistance. Turning over particularly bad debts to a reputable collection agency allows you to distance yourself from the matter and focus on business. In addition, we can review your financial statements and collection procedures to help you set specific, achievable goals in getting paid faster.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.