If your business provides its customers with credit terms for payment of invoices, then management of those accounts receivables (also called debtors) is vital to the health of your business. Here are our top 6 tips for managing your accounts receivable
- Implement credit policies: One of the most important ways to manage accounts receivable is to have clear credit policies in place. This includes setting credit limits for customers, establishing payment terms, and regularly reviewing creditworthiness.
- Send invoices promptly: Another key step in managing accounts receivable is to send invoices to customers as quickly as possible. This will help ensure that payments are received in a timely manner and that customers are aware of the amounts they owe.
- Follow up on overdue payments: It’s important to follow up with customers who have overdue payments. This can be done through phone calls, emails, or letters. This will help to remind customers of the amounts they owe and may encourage them to make payments more quickly. The best way to do this is to have a structured and documented process.
- Offer incentives for early payment: To encourage customers to pay their bills more quickly, consider offering incentives for early payment. For example, you could offer a discount for customers who pay within a certain time frame.
- Use Xero: Xero accounting software can be a valuable tool for managing accounts receivable. It can be used to track customer payments, send invoices, automatically generated reminders as well as generate reports for management. This can help you stay on top of your accounts receivable and make it easier to identify any issues that may arise.
- Consider using a collection agency: If a customer is consistently late with payments, it may be time to consider using a collection agency. These organizations can help you recover overdue payments and can also provide valuable insight into a customer’s creditworthiness.
Overall, managing accounts receivable is an ongoing process that requires regular attention. By implementing credit policies, sending invoices promptly, following up on overdue payments, offering incentives for early payment, using Xero accounting software, and considering using a collection agency, you can help ensure that your accounts receivable are managed effectively and that you get paid on time. Please contact us to find out how working with us will have a positive impact on your business.
