As a small business owner, there’s nothing worse than having overdue accounts – funds you could be using to enhance sales, replenish inventory or simply make necessary payments to your own accounts. While there are always going to be those select invoices that take a bit longer than usual to complete, it should be the goal of any small business to reduce overdue accounts. There’s a way to promote effective debt collecting without being overbearing or rude, in fact, there are quite a few solutions that will help reduce overdue accounts and perhaps even prevent them in the first place.
- Create a clear debt policy – One of the best ways to reduce overdue accounts is to prevent them before they become late. This can be done by a writing clear and concise credit policy that highlights your terms and conditions with each client. The policy should contain information such as the process in which you send out statements and how long you allow an account to become overdue before it’s turned over to a collection agency. Go over this debt policy with clients when you begin the business relationship – have them sign and agree to the conditions before moving forward.
- Use the phone – Emails and electronic invoices can easily slip through the cracks or be avoided much easier than a direct phone call to the client. Be polite when calling a client about an overdue account as it might just be an oversight within the office, but that doesn’t mean you shouldn’t be firm. Don’t allow clients to create excuses and not pay the invoice – offer solutions to ensure you get your payment, even if that means setting them up with a payment plan.
- Stay on top of debts – As a business owner, you also need to stay on top of outstanding debts to reduce overdue accounts. Using a debtor tracking and reminder system such as debtor daddy, to assist you in staying productive and timely with sending out invoices and creating a steady cash flow for your own business.
While it’s frustrating to deal with slow-paying clients, reduce overdue accounts by implementing your own solutions and create clear guidelines as to what you expect from those working with you!
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