Getting Over on Overdue

Getting paid on a timely basis is one of the greatest challenges for running a small business, especially when cash flow is tight. Who needs to spend their days chasing down invoices when there are more important things demanding your time, such as fostering customer relationships or generating new sales.

A proactive strategy for discouraging late payments is the best way to avoid being bogged down with outstanding accounts Try following these steps:

• Be organized in your record keeping. Send invoices out promptly and include all relevant information about the purchase, including how the order was placed, an itemization of what was delivered, etc. This way, the customer has everything they need to get payment authorization, and you’re creating an audit trail that can help your own employees clearly remember the scope of the sale so there’s no confusion if an invoice is challenged. Also make sure you clearly state your payment terms up front so there’s no question about expectations. Ask customers about their preferred method of communication regarding billing—whether it’s e-mail or a specific fax number.
  
• Be systematic about monitoring accounts. Be sure to stay on top of any signs of potential problems such as failure to return calls or bounced checks. It’s helpful to do an aging of accounts receivables so you have a handle on everything owed to you at a specific point in time.
  
• Be prompt with follow-ups. As soon as an account lands in your past-due column, send follow-up reminders immediately. When talking to someone about an unpaid invoice, be definitive in soliciting specifics on their next steps. If they miss the agreed-to target dates, follow up immediately, and be sure to follow through on the tactics you say you will take.

Back