Businesses use many strategies and management systems to ensure their business expands profitably. However, most of the time we forget that what runs a business is money and ensuring that you have no defaulters of late payments is really important. While it may feel wrong and rude to ask your clients for the money they owe you, it is also necessary. Business is business and while maintaining good relations are crucial, keeping your company in operation and avoiding any cash flow problems is also essential.
Let us look at some helpful tips to grow your business through debtor management-
Tip #1- Keep Your Payment Policies Clear:
When beginning a transaction with a client, make sure you inform them about your policies and terms clearly. You can also include these terms and conditions about the service policies on your invoices concisely. There will be no room for errors if your terms are clear to the client. Add contact information for the concerned department which the client can contact if they still have any confusion.
Tip #2- Reduce the Term for Payments:
Allowing your customers enough time to pay you for your services is a good way to cater to relationships. However, providing a very long term to pay dues will likely result in late or overdue payments since they will take it lightly. Make sure you clearly provide details about the payment terms in your invoice.
Tip #3- Offer Early Payment Discounts:
It is not uncommon in the business world to see companies giving some form of discount to the clients that pay earlier than their due dates. This is especially true for large orders and is an excellent way to avoid overdue invoices for a large sum. However, there may be some vendors or customers that can take advantage of this policy you offer. Make sure you check the business credit history reports and only provide such facilities to your good clients.
Tip #4- Keep Your Monitoring Systems Up to Date:
Monitoring your ledgers closely is crucial to ensure your business does not face a disrupted cash flow. You can find solutions to cash flow trends in advance before it significantly impacts your operations. Many credit management software and services are available that you can use to reduce the burden of managing hundreds of ledgers at a single time.
Tip #5- Have a Robust Accounts Receivable Process in Place:
Cash flow problems and debtors can be effectively prevented if you have a strong accounts receivable process in place. Make sure that your accounts management team understands you and what results you expect from them.
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