Vital Tips on how to Speed up the Collection and management of Accounts Receivable
Any owner of business must know that a sale can’t be considered as complete until the time when the cash has been received in your business bank account. To many owners of businesses, collection of accounts receivables is one of the most unpleasant tasks. If the accounts receivables are not managed properly, your business will definitely run into cash flow problems for you will not be able to get cash when you need it. Poor management of accounts receivables translates to poor management of your business cash flow, and this can put it in serious financial problems.
The following are some vital tips to help improve the management of accounts receivables with the assistance and guidance of an accounts receivables collection agency.
Send out bills in time:
One common excuse among the debtors and customers whose accounts are long overdue is that they didn’t receive their bills in time. Depending on the credit terms you have accorded the customer, you should ensure that the bill is promptly sent out before it becomes long overdue. In your bill, ensure that you informal the customer the penalties and other charges that will be imposed on overdue payments. The collection agency will use that information to calculate how much a customer should pay as full or part settlement of the overdue accounts.
Offer various payment options:
One of the reasons why customers are not paying in time may be due to limited payment options. Allow your customers to make payments through away of the various accepted methods; cheque, credit card, direct bank account deposit, etc. If you allow the customers to make payments through their preferred options, they won’t have any excuse for not paying in time.
For each account, schedule a collection:
Don’t wait until that time when accounts are long overdue. Treat each customer independently based on their creditworthiness and history of payment. Together with your collection agency, develop a unique method of collection of accounts before they become overdue.
REMEMBER: the longer an overdue account remains unpaid then the higher the chances it won’t get paid, and the more difficult it becomes to collect. Action to collect should be taken immediately an account becomes overdue. Don’t wait until the time when several days, weeks or months will have passed so as to initiate process of recovery.
Choose a reliable collection agency
There are many collection agencies in Toronto but not all of them are suited to your business. You must evaluate each collection agency independently and determine whether or not it has what it takes to help you improve the collection and management of overdue accounts receivables. Ensure that you deal with a licensed collection agency that has good history of high rates of recovery without violating the laws that regulate the debt collection industry.
Engage the collection agency on long term basis
To increase the rate of recovery, you should engage the collection agency on long term basis. This will give the agency ample time to engage your customers and know them, making it easier to follow up on accounts immediately they become overdue.