31 Dec How to Efficiently Manage Your Receivables
Managing your receivables is quite challenging and difficult as well. It is necessary to ensure that customers make regular payment within the stipulated period, and it is also important to ensure the improvement of the receipt processes.
The management of receivables is one of the main pillars of the financial department, so if it is not carried out efficiently, your business runs the risk of having irreparable losses, thus hampering its development.
To help you get away from this kind of trap, we’ve separated 6 essential tips to improve the receivability management of your business.
1. Record all receivable payments
The first step in optimizing your company’s receivables management is to register all accounts through which you get receivables. Without proper registration, you will not be able to put any other action into practice.
When registering your receivables you need to identify the customer’s name, the invoice due date, and how the payment will be made.
2. Monthly tracking of your receivables
Once you have registered your receivables, it is time to do the monthly monitoring. At this point, you can decide what is the best practice for your company, if it is small, this monitoring can be done daily, for example. If your company has multiple branches, it is best to make monthly checks.
This tracking will allow the manager to have more control over the receipts of the business, through which you can identify whether the payments will be sufficient to meet the company’s monthly obligations, such as paying suppliers, employees, and taxes.
With monthly monitoring, you’ll be able to strategize to fight against bad debt, without losing the client.
3. Fine Late Payments Without Fear
While fining is an action that is often uncomfortable, it’s important to put it into practice to make sure your business gets the amount it needs to meet its commitments. First and foremost, remember that billing is your right.
The only thing you need to be careful about when you fine is to avoid rudeness and threats, as this type of attitude can bring disruption to your business. So, be cordial, try to understand the client’s situation and then close a favorable deal to both parties.
Another interesting practice is to send a message reminding the customer of your appointment a few days before the due date.
4. Offer advantages for prepayment
Offering early payment advantages is a strategy that attracts the consumer. Therefore, to optimize the management of receivables of your company it is fundamental to offer benefits in advance payments.
These benefits can be in the form of discounts in the instalments or the next purchases, delivery of gifts, or any other incentives that you can offer. These actions may also be taken for the customers who make the payment on the scheduled date.
5. Count on the help of technology
A company cannot – under any circumstances – only rely on manual spreadsheets. This is a mistake that can jeopardize your entire financial planning.
To avoid future troubles, it is essential that you rely on information technology and adopt an efficient management system that will help you control your receivables in the best possible way.
Through the management system, you will be able to monitor in real time all the financial transactions of your business, being able to monitor more efficiently your receivables and to check in advance the number of defaulters in your business.
6. Perform the correct pricing of your products
Proper pricing of products is essential to ensure that your profitability will be sufficient to cover all of the company’s costs. That’s because if you prefer to charge less, you’ll need to sell a higher amount of products to get a positive return.
Now, if your intention is to price your products above market prices, the difficulty to attract more customers will be much greater.
As you may well realize, managing receivables are critical to ensuring the success of any business, so be sure to put into practice every tip we present in this article as they will help you optimize your revenue while improving your staff productivity and ensuring that your business will meet all of its obligations on time.
What did you think of our tips? Let us know in the comments section below.