Send invoices the day a project is completed or as soon as an item is shipped. By waiting even a few days, you may miss a customer's payment cycle and significantly extend the time it takes to receive funds. Automated invoicing and receivables solutions help with both creating those efficiencies and managing customer relationships. This will not only become critical as more and more businesses move toward electronic payments, it could also be a selling point to potential customers who may appreciate having that option. It also benefits your bottom line by limiting your exposure to late payments.
Set Clear Terms:
Instead of stamping "Due on receipt," include a specific due date. Companies that pay in 30 or 45 days will follow their own schedules, but it gives you the chance to put your terms in writing. If you offer trade terms, such as discounts for early payment, use the actual dates involved instead of simply including your generic terms.
Build a Document Trail:
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Document all communications and telephone conversations about invoices so they are on file for future reference. Keep track of requested changes in writing. This trail will help when going after late payments. Develop a payment tracking system so overdue payments are brought to your attention. Consider using software that tracks payments or ask your bookkeeper, CPA, banker or financial adviser for suggestions on ways to do this yourself. As soon as you send an invoice, put the details into your tracking system. Also record the date you receive payment.
Make Collection Calls:
Promptly follow up on late payments with a telephone call. Reaching out can often clear up misunderstandings. Adopt a matter-of-fact manner for these calls and assume good intentions on the part of your customers. Before the conversation ends, determine a specific amount due and date of receipt. Have someone other than you or your customer-facing staff make collections calls if you are concerned about damaging customer relations.
Mary Ann Reilly is with American Express OPEN working with AcceptPay, a service available from the company. AcceptPay is an online invoicing and payment solution that helps business owners get paid faster and improve cash flow at a time when customers are taking a longer time to pay. AcceptPay allows business owners to create, send and track invoices - all in one place. Customers then have the option to pay the invoice through a variety of methods, including major credit and debit cards, eChecks, cash, or checks. Resulting payments are deposited directly into the business owner's bank account. Mary Ann Reilly is the senior vice president for American Express OPEN.
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