Without strong accounts receivable practices, your business may struggle to take in the money that it’s owed. The good news is that improving accounts receivable operations is possible, especially with the following tactics.

Standardize Collections

Some businesses approach accounts receivable collections on a reactionary basis, meaning they make up procedures on the fly. This can lead to confusion among customers and delayed payments. It’s worth any business’s time to standardize the process.

Listen to Customers

Sometimes, customers aren’t at fault for late payments. Therefore, when a customer doesn’t pay on time, communicating with them is often enough to resolve the matter. For instance, your business may have sent the invoice to the wrong address, or the customer may be having trouble with your payment processor. Either way, finding out will let you fix the problem, get paid, and preserve the customer’s relationship with your business.

Offer Solutions

While it may be tempting to play hardball with delinquent clients, that may not result in them paying any faster. Instead, it’s often a better strategy to offer a payment plan for clients that are having difficulty paying. They may appreciate the flexibility, while your business will start to see money flowing in through accounts receivable. And when it comes to particularly diligent clients, discounts for early payments may boost your cash flow and encourage them to continue paying promptly.

Use Collections Agencies Cautiously

Collections agencies certainly are necessary in some situations, but you should only turn to them after all other options have been exhausted. They extract a fee for their services, and you can generally expect the relationship with a client to end once their balance goes into collections.

When you do need to use a collections agency to resolve an accounts receivable matter, make sure the client knows the debt is about to move into the agency’s hands. That may provide the nudge they need to finally pay up.

The business world can be a complicated place, but KMS Funding can help you understand the financing side of things. To learn more, just drop us a message.