Easy Tips To Make Your Debtors Pay Quickly

Easy Tips To Make Your Debtors Pay Quickly

Unpaid Debtors?

Debt collection can literally make or break your business. Failing to follow up with debtors regularly could make you end up with zero in the bank. It’s a fact that the older a debt becomes, the harder it is to collect.

It’s vital that you create a process for dealing with debtors and stick with it. The more you enforce this, the quicker clients learn to stay within your terms of trade.

So what can you do to change this cycle and get paid without delay?

Spell out your payment terms clearly:

Before you start working with any new client, always provide your terms in writing. Clearly state your rates, payment due dates, and policies for late payment – including any fees incurred on balances owing.

Send Invoice Immediately:

If you’re currently preparing your invoices manually, switch over to an accounting system with automated billing. You’ll never forget to invoice a client, and you’ll eliminate errors as you save time. The first time a client is billed make sure the contact information on your invoice is complete to avoid delays with processing.

Provide multiple payment options to your customer:

We are living in the world of digital currency and plastic currency. Nowadays, there are several payment methods that most businesses use such as credit card, online payment gateway such as PayPal, Stripe, Eway etc, Bitcoins and Altcoins, After Pay, Lay By besides traditional method of bank transfer and cheque. Also, most accounting software and websites provide easy plugins and integration to connect these payment methods to your invoice or directly on your website which prompts your customers to pay quickly.

Follow up for outstanding invoices:

Stay on top of outstanding invoices and call your customer immediately when a payment is past due. Ask for the status of the invoice and if there’s anything you can do to speed up payment. Sometimes a simple change, like including a purchase order number on the invoice, can speed up processing. Nowadays, you can set up automatic payment reminders to be sent out to your debtors into your accounting software itself.

Reduce and Rewards:

Net 30 payment terms are fairly standard in business, but there’s nothing stopping you from asking for payment sooner. Some business owners make payment due at Net 7 or 10; others stipulate payment is due upon receipt of invoice. Also you can offer “On Time Payment Discount” or “Early Payment Discount” to encourage your customers to pay on time.

Charge interest:

As part of your terms, specify that if a client’s payment is past due, a weekly fee of 2% will be added onto the total until funds are received in full.

Get paid upfront or do progress payments:

Collect a partial deposit – or the entire amount in full – before you provide a product or service to your customers. For larger ongoing projects, consider progress payments to help ease costs during the project.

Put hold on goods/service:

Stop your supply of products or services until you receive payment. With this tactic you’ll avoid the accumulation of an even greater loss with a consistently late or non-paying client.

Monitor Accounts Receivables:

Monitor your accounts receivable on a weekly basis so you can act fast if a customer hasn’t paid on time. An AR aging report can help you easily track outstanding invoices right in your accounting software – or create an Excel report you can track manually, if you prefer.

Final Reminder:

Perhaps the most important tip for encouraging prompt payment is excellent communication.

When you follow up on a late invoice, explain why it’s important to receive timely payment in order to run your business effectively. Ask when you can expect payment, and agree on a date.

If the money still isn’t forthcoming, offer to negotiate a payment schedule as a next-to-last option – before you have no choice but contact a collection agency

Contact Us if you like to know about how automatic accounts receivable can help your business?

Share your love

No Comments

Give a Reply

Enjoy this blog? Please spread the word :)