Debt Collection – What to do when customers don’t pay Part 2
Today we explore Part 2 of the 10 easy steps to manage debt collection and cash flow issues in your business. Click here to review Debt Collection – What to do when customers don’t pay Part 1, and come back soon for Part 3.
“Ensure your business has a sound process in place to track and collect accounts receivable”
- Issue invoices promptly: You can’t expect your customers to pay promptly if you don’t issue their invoices in a timely manner. Make sure you get your invoices out the door in a speedy fashion.
- Monitor your accounts receivables on an ongoing basis: Having a solid process in place to track accounts receivable is vital. This includes monitoring invoices as they head towards the end of the standard 30 day payment term. Keeping a close eye on each and every credit account ensures that you are in a position to chase outstanding debts very quickly following the arrival of the overdue date.
- Gradually escalate pressure on your debtors: Issuing a polite reminder as a bill approaches its due date is a smart business practice. Bills can get lost or over-looked; this reminder is a good way to ensure that your bill is front of mind. The pressure you apply should increase as the bill enters overdue territory.
- Be prepared to address individual circumstances: Sometimes customers run into a short term problem or they have a valid reason for non-payment. In these instances you need to decide how valuable this business is to you and therefore, how far you are willing to extend the customer’s credit terms. If however this becomes a persistent problem the best option is to end the credit agreement.
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