According to a recent study, Receivable Management Group is one in four small businesses struggle to collect payments (Debt Collection) from clients. In the long run, companies that can’t collect payment from their customers are forced to draw from their cash reserves or seek outside escrow group consulting financing to make ends meet.
While collection problems are clearly commonplace among small businesses, owners don’t have to suffer delinquent accounts in silence. There are steps a firm can take to better manage its accounts receivables and increase overall cash flow.
Receivables also termed as trade credit or debtors are components of current assets. When a firm sells its product in credit, account receivables are created.
- To evaluate the creditworthiness of customers before granting or extending the credit.
- To minimize the cost of investment in receivables.
- To minimize the possible bad debt losses.
- To maintain a tradeoff between costs and benefits associated with credit policy.
Here are 7 effective ways to improve accounts receivable by getting paid faster.
- Go Electronic
If you want to expedite the invoicing process, consider sending bills via email, using an email invoice template, instead of the U.S. postal Service. While snail mail can cause your invoices to be delayed by several days, email ensures they reach the requisite party immediately. Just be sure to confirm your clients email addresses ahead of time, as you don’t want to complain about late payments on invoices that your customers never received.