If you’re in the business of sales whether its services or goods, managing accounts receivable and ensuring timely collection of debts is a crucial aspect of maintaining cash flow and financial stability of your business.
While the primary focus of sales is to generate revenue by selling products or services, it’s equally important to have systems in place for managing accounts receivable and following up on unpaid invoices. There is no point in having high sales but no follow- up or follow through on collections.
Here are some methods for collection of debts that sales professionals and businesses should employ:
1. Establish clear payment terms in your purchase orders or invoices. Make sure your customers understand when payment is due and what the consequences are for late payments.
2. Issue invoices promptly and accurately. Include all necessary details such as payment due date, payment methods, and any penalties for late payments.
3. Train a team member to initiate regular follow-up calls or emails to remind customers about upcoming or overdue payments. A polite and professional reminder can often prompt customers to settle their debts.
4. In cases where customers are unable to pay the full amount upfront, consider offering payment plans or instalment options. This can make it easier for customers to manage their payments while still ensuring that you receive the money owed. Make sure any such payment plans are put in writing and agreed to by both parties.
5. Establish a clear escalation process for handling overdue accounts. This may involve sending formal letters or notices, or pursuing legal action as a last resort.
By implementing these methods, you can ensure that debts are collected in a timely and efficient manner, contributing to the financial health of your business.