A business will not run without the flow of cash from the suppliers and the customers. In this case, you are the business offering services or products to your customers on credit. Usually, you may have to receive the payment for a single purchase or a group of purchases after some days. This account of amounts yet to be received by your company for what your customers have already bought is known as the account receivable. There should be a proper management system for this AR to ensure that your company receives all the outstanding dues on time. If someone is not paying you properly, you should know this. Else, it will become a loss. However, you can find some applications and software to help you with AR management. You can go through blogs like John Abio to understand the usage of these tools and the importance of AR for your business. If you are receiving all your dues on time without issues, your AR efficiency is high. You could do some activities to achieve better AR efficiency. Let us discuss the ways to improve this efficiency.
How could you improve your business’s account receivable efficiency?
Offering payment incentives
The primary way to get your dues paid on time is by offering payment incentives to the customers. You should announce a discount for those who clear their invoices within a short span. The discount’s size may reduce as the customer delays the payment. If you do so, your customers would love to pay less than what they are supposed to do. Hence, you will see a reduction in the number of disputes happening because of late payments and overdue from your client’s side. Usually, the companies will offer a one percent discount for payments made within ten days of invoice.
Diversified payment methods
The primary reason for genuine delays by your clients will be issued with a particular payment method. If you find such an issue, you can offer any other payment method. The more diversified your payment options are the faster will be the customers’ payments. Also, the transaction fee for every payment method will vary. Hence, your customers could find a particular method better than others. So, you can shorten the payment period by offering a suitable option as per your clients’ wishes. Some traditionally used payment methods are wire transfer, credit card payments, cheques, PayPal, and the likes. You should also be flexible to change the method if necessary.
Account receivables management is not an easy task and there will be several data to go through and maintain. So, the manual process of management of these accounts will be tricky and there could be some issues. However, you can avoid these errors and issues by using software dedicated to the management of the account receivables of your company. All you should do with this tool is to update the customer files and invoice information once. You will get notified of each invoice and payment dates automatically.