When you own or manage a business, it is possible that, by promoting the increase in customers and sales, you come to leave the correct administration of your accounts receivable in the background. This is a bad practice, as doing so can negatively impact your company’s finances.
And you must keep in mind that the optimization of collection processes is a fundamental part of being able to keep your business standing, since in addition to providing financial stability to your company, it will also impact the performance of other areas that comprise it. With this, your company will need tools for improving credit collection such as smart and reliable invoicing software. Integrating this into your system would further improve your business processes and will let you focus on things that matter most.
Specifically, managing your business correctly prevents unnecessary capital expenditures, which will help you increase your cash flow. Therefore, if you have not dedicated the necessary time to these processes, it is time for you to start laying the foundations for proper business administration.
Do you want to reduce debt and costs and improve administration to boost the growth of your company? Then you should optimize the management of your accounts receivable by following these 7 points:
1.- Constantly check the status of your clients
If you intend to do business that involves long-term relationships, you should carefully review your customers’ credit histories to verify their creditworthiness.
Yooz is the collection management platform that centralizes and automates processes, which allows you to reduce your overdue portfolio and increase your productivity.
Remember that your company is not a bank: the fact that you extend credit is only a privilege within your customer service.
2.- Clarify the time needed to receive payments
A clear example to understand this point: If your suppliers expect you to pay them within 30 days, then you should not give your customers more than 45 days to pay you. If instead you give your customers 15 days to pay their outstanding invoices, your cash flow will not be affected.
3.- Stick to your credit policies
Please, do not offer credit to all your clients if you know that they do not have adequate solvency. Also, do not offer credit to new clients until you have achieved a constant and reliable relationship with them.
Once the credit has been extended, you must be very strict if any of your clients do not stick to the defined plan.
4.- Explain in detail the payment conditions
In the contract you have with your clients, you must clearly and objectively indicate the due date of the payment instead of using vague terms such as “when received” or “when payment is received”.
These types of terms are very imprecise for customers, so they end up being the ones and not you who decide on what date to pay. Therefore, the clarity and objectivity of the clauses that make up your contract is important.
5.- Impose charges for late payments
There is nothing wrong with trying to use certain methods to ensure that your client pays their debt. Therefore, it is valid to add an additional charge for late payments, such as a certain percentage of interest on the total debt.
As a good strategy, you can cancel this charge the first time your customer is late with the payment. However, make it clear that this is a unique situation and that you will not write off future late fees if they continue to be late in settling their outstanding account.
6.- Offer discounts for punctual payments
When a customer pays his bills on time, you can reward him by giving him a discount. This will be a good strategy for the client to feel really valued and choose to continue being punctual with their payments, which will help you improve cash flow and reduce non-performing loans.
7.- Invest in a collection management software
To save time (and money), a good option is to adopt digital tools and use an accounts receivable system, which is responsible for automatically sending reminders to your customers so that they keep their pending payments in mind. This platform can also send recurring invoices automatically, which will help you have better control and visibility of invoices.
The importance of business collection automation software
Having an automated collection platform that helps you have control over receiving payments makes many tasks easier.
Measuring your interaction channels from the same dashboard allows you to effectively monitor the actions you carry out. One of the main points in the collection process is to have the data of each of your clients, with the option of being able to update them in a simple way.
If you must apply something in your business, they are tools that help you optimize time and effort, improving your control of invoices and processes to reach the established goals. Do not fear the technological future: keep your eyes open for all these new opportunities for optimization of collections management.
What are the advantages of collection automation?
The new technologies to automate your collection have multiple benefits for you:
- Minimize human errors
- Free up time for your work team to occupy it with other tasks
- Make every process of credit issuance, accounts receivable reminders and payment records efficient
Modernize your collection process now!
To improve your business cash flow, it is important to use tools that allow you to automate processes and improve payment receipt control.
You will receive instant payment notifications, perform easy reconciliations, allow multiple payment options and gain real-time visibility that will allow you to resolve each transaction in the best way. Save time and increase the rate of success in collections in your company with Yooz.