With today’s challenges business owners must maintain a laser focus on the fundamentals of their business. Client relationships, employee well being and most importantly cash flow. One of the most powerful tools is often the most neglected by the business owner is collections! Contacting the customers that owe you money is vital to your company’s cash flow. Remember the longer a past due invoices remains unpaid, the more likely the client is not going pay. So, what steps should you be taking to collect your open invoices?
Tips For Collecting Past Due Invoices
- First, understand the difference between outstanding invoices and unpaid invoices. The difference is unpaid invoices refers to invoices open past their due date. Watch out for a customer that has both current and past due invoices, without your intervention all the invoices will soon be past due! Make sure you have clearly put a due date on every invoice.
- Second, negotiate for quick pay with your customers. For a customer with regular orders, try to bill at the beginning of the month. Ask your customer to pay a deposit with the order. The more money you get up front the stronger your cash flow.
- Third, have your customers pay you ACH. This will eliminate waiting on the mail and a lot of excuses from your customers.
- Fourth, contact your customer. It is reasonable to contact accounting before your invoice is due to make sure they have your invoice and it is approved for payment. After the due date a polite but firm email asking when to expect payment is the least you should do. Depending on circumstances phone calls can go a long way towards getting a past due invoice paid. Many business owners are scared to ask for payment – you cannot afford to not ask, even demand payment. Each contact with your past due account needs to be firmer, and higher up the ladder, all the way to the Chief Financial Officer and the President. Don’t let up until you’re paid.
A great tool for keeping your cash flow positive is factoring with American Receivable Corporation. We are a top rated 42-year-old factoring company. Our simple program turns your invoices into CASH. Being managed by the founding owners, we provide quick funding with no surprises. To learn more about how American Receivable can help you stay cash flow positive, submit a request for a quick quote, or call us at 800-297-6652.