The business’ accounts receivable is not one of the crucial line items extremely monitored by business owners and accountants. Although such may be the fact, it is a line item that requires business attention especially if the outstanding receivables becomes significantly material. Then again, it remains difficult for companies to manage their receivables as they increase beyond 50 days or even 120 days. In this regard, you should be highly aware of these essential elements to help you in handling your receivables.
Harness the power of technology by creating a database for your consumers’ email. Instead of sending them a hard copy of the bill, it is best to send it through electronic mail to avoid delays. Furthermore, consumers also find this convenient as they can see it immediately, and be notified of their pending payments. However, you have to make sure that such email addresses are valid and being used to prevent problems in the future.
Most often, small businesses rely on themselves to reduce outstanding receivables. Although there is no problem with this arrangement, some still find it hard to do such a task. In fact, in the context of receivables, the greater the collectors, the better to remind consumers of their need to pay. However, be wary as you might only end up irritating the consumer. Hence, in this case, it is best that you get the assistance of a collection agency like a Gold Coast debt collector to aid you in your collection efforts. Though it would entail additional cost, you could be assured that your receivables will be reduced in the proper and professional manner, which will not offend your consumers.
In instances when you transact with business, you can offer payment reductions. Payment terms vary depending on the business but the most common is 2%/10, net-30 – indicating that a 2% discount would be given if full payment of the bill initially payable within 30 days will be made within the first 10 days. Other businesses use more lenient payment terms, but ideally, the discussed payment terms should be the target to ensure that your cash flow will not be adversely affected. Through this, the days outstanding of your receivables will be reduced to only 10 days.
Payment is important in any business as this forms part of the business income. Without it, the business will not survive. Hence, the receivable collection is tremendously important. In doing so, do not be ashamed of using your mobile phones, local lines, electronic mails, or other communication channels to follow up the bill payment. If you think about it, you deserve this payment as this represents the goods you sold or the services you rendered. In this day and age when money is highly important, nothing comes for free so don’t hesitate in making follow-ups.
Receivables may not be the common term you can hear in business operations – unlike debts and assets. It is also an important aspect of business that you should attend to. Prioritize your receivables by incorporating these essential elements in your business operations.