Overdues can significantly impact a business’s cash flow and profitability. Implementing strategies to reduce overdues is crucial for any business that offers credit terms to customers. Here are some tips for reducing overdues:
Streamline Credit Policies
Review credit terms and policies regularly to ensure they align with your business goals. Consider shortening payment terms for higher risk customers. Require deposits or partial payments upfront for large orders. Perform credit checks on new customers to assess risk.
Proactively communicate with customers about due dates and past due balances. Send invoice reminders and past due notices via email, text or mail. Make it easy for customers to pay online or over the phone. Offer incentives for early payment.
Automating tasks like sending invoice reminders and past due notices frees up staff time. Customer portals allow 24/7 account access and payment abilities. Accepting recurring payments reduces late payments.
Offer Payment Plans
For customers struggling to pay, offer installment plans to pay off balances over time. This maintains the customer relationship and increases likelihood of collecting.
Assess Account Status
Identify chronic late payers who repeatedly miss due dates. Consider changing terms or restricting future orders for these high risk accounts.
When in-house efforts fail, partnering with a collections agency transfers overdues off your books. Agencies have tools and expertise to recover outstanding balances.
Reducing overdues requires an ongoing, concerted effort. The investment of time pays dividends through improved cash flow and financial performance. Implementing even a few of these tips can significantly impact overdue accounts.