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Receivables Management

Getting your clients and customers to pay on time is one of the many challenges you’ll face as a small business owner. With that in mind, what can you do to take your receivables management to the next level? Threaten an untimely demise to all accounts not paying on time? That’s definitely not the answer. Not only will you lose the respect of the clients and customers that once worked for you, you’ll lose their accounts forever.

Rather than alienate the people that help your business thrive, try these five quick tricks for getting people to pay instead:

  1. Make invoicing a priority.  As soon as you’ve completed the work, send the invoice.  This will encourage the client to take care of his or her part of the agreement quickly and without several emails following up on the status on the payment. If you put invoicing at the top of your list, you’ll see clients paying on time more often.
  2. Go electronic.  If possible, send all invoices electronically and set it up so you can take electronic payments. If you wait for a client or customer to pay by check, you’ll be forced to wait until the check clears to receive the funds.  There are a number of different payment options that you could use to simplify the process. PayPal offers its users the ability to send detailed invoices.  You could use a PayPal debit card to retrieve funds or have it deposited to your business bank account in as little as 3 to 5 days.
  3. Be polite.  You attract more bees with honey than with vinegar.  A little courtesy can go a long way. Always thank your clients and customers for their business.  Say please and thank you when making a request for payment.  This will stand out in their minds and they’ll want to go the extra mile to make sure that your invoice is taken care of right away.
  4. Give a specific date to pay by.  Make sure that your terms of agreement states that all invoices must be paid by a certain date to be considered current. Instate a late fee to defer late payments.  Put the phrase “Payment Due Upon Receipt” on your invoice or spell out the time frame that you’re willing to give them to get their payment to you. Again, it pays to be polite so make sure that your phrasing is appropriate but firm.
  5. Send out reminders as necessary.  Make sure to send out reminders every now and then.  You’d be surprised how easy it is to forget an invoice with so many things to do throughout the day. Give your clients and customers the benefit of a doubt.  If they haven’t paid and several days have gone by, send them a heads up that their invoice is due now, in fourteen days, etc.

An occasion reminder is necessary if you want to get paid. If you’re concerned about acquiring too many past due accounts, you can add a disclaimer to your terms of agreement stating that you will charge a late fee for delinquent invoices. If a client or customer wants to stay on good terms with you, they’ll make sure not to violate your terms of service by paying early or on time.

Getting people to pay their accounts on time takes practice but once you’ve gotten into the habit of applying the aforementioned list of tricks, you’ll have an easier time receiving what is due to you in no time. Take your receivables management to the next level in 2014. Your business will benefit from these quick and effective tips.