Outstanding accounts receivable are among the most significant issues that businesses face, especially when your industry norms are to extend credit to your customers. While some clients may prefer to pay in advance, credit systems are commonly put in place to keep projects moving forward and to smooth out billing across multiple authorized purchasers. Businesses are often left seeking solutions to reduce their receivables aged beyond 30 days and how to prevent that from happening in the first place.
Windward System Five has the tools that you need, and here are a few small tweaks that can help reduce your aged AR.
Clearly State Payment Terms on Invoices
It is not uncommon for Businesses to have terms and conditions that span several paragraphs, which clients don’t really read anyway. While stating your terms and conditions is a good practice, the terms of payment should be clearly mentioned in bold on the front page of your statements. If you want payment in a week, state clearly that you want it then, and failing to do so will result in penalties. By doing this, you put your payment policy right in the face of your client, which sets expectations and usually results in a considerable decrease in outstanding accounts receivables from piling up.
Be Consistent
Accounts Receivable collection is based on past precedence. If you are known for a laid-back attitude toward payment collections, chances are that your clients will delay their payments. Businesses that have no system in place for debt collection are dependent on their client's will. One of the ways to handle this issue is to send statements out 7 days prior to the payment and then email again 2 or 3 days before the payment due date. It sends a strong signal to the client that you are serious about outstanding accounts receivables and would like them to comply with your policies
Be Proactive
Having a system in place is just not enough when it comes to managing Accounts Receivable. You have to ensure that the system is being followed properly. In the case where someone does not pay up by the specific date, an arrears letter must be ready to be sent on the next day. Even after the letter is posted, you must have a follow-up plan on how to deal with non-payment. Don't be too shy to pick up the phone when it comes to collecting monies owed to you.
Automate the Process
Windward System Five is great for managing everything from your sales invoices to maintaining income statements and balance sheets. Having all of the information about your customers in one integrated solution allows you to send and receive critical information at designated times. Windward System Five has the tools you need to properly manage your outstanding accounts receivables, which creates a professional image of your company. Included is an efficient process for end-of-month statement communication. Windward System Five also allows you to keep and edit notes on specific clients, which is accessible to every member of your team. Everyone will be able to provide your customer with a statement so that payment can efficiently be collected.
Already a client?
You have resources available to you.
This topic is found on the Windward Software Wiki. You can also use searchable self-help, and there are courses available in the Windward Learning Academy.
