Running a business has many challenges and one of the major frustrations can be the collections process. You have accounts receivables you cannot collect on; the problem here is you have money but can't access. Small businesses cannot survive with uncollected accounts receivables. Small businesses sometimes face collections problems. Having a well planned, clear manner managing business accounts receivables makes a business avoid pitfalls problems related to collections. The most important factor to the success of a business is the accounts receivables management system which manages billing, collections and receivables. This needs to be set up and worked diligently. Non-payers are a risk to a poor set up system.
A business can have many customers but gets minimal income from these customers. This easily makes the business to shut down. A successful implemented collections management system for the business saves the business from such shutdown. What are the steps to ensure you implement a successful collections management system for the business?
Payment methods should be established from the first day of business. In setting up a business, think about how people are going to pay you. This depends mainly on the type of business and if your customers are people or companies or both. It is recommended you use established, easy means of payment for customers to use. This can be cash, checks, credit and debit, payment plans, online payment methods and any other external payment source. A business with more payment options is more helpful to customers. Some payment options such as credit and debit cards demands for premium payment.
Payment Processing rules: after a business has settled with the type of payment, the next step is to set up rules regulation acceptance and handling of payment options. For example, rules for accepting checks should be set. Employees may face a situation whether to do credit check on a new customer. When are customers allowed to do overtime? This shows clear rules must be set up to ensure every employee and customer knows and adheres to them. Sending out bills can be seen as a simple step but is overlooked sometimes in a small company. Sending out bills to customers who owe the business money is very important. This billing should be sent at least twice a month or more often to seriously recover lost money. This is a way for customers to have a reminder of the money they owe the business.
Accounts receivable aging report: this shows you when to send out bills and when to put forth stronger collection methods depending on the type of business, there are customers who don't pay on time of purchase and others who pay over time. Software account programs provide this help. Non-payers are a risk for they can easily bring about the shutdown of business. Therefore, don't be hesitant initiating collections proceedings. An account can be sent to a collections agency or small claims court. Decide the best depending on the type of account. Some customers are not serious and this type of action establishes a reputation your business is to be taken seriously.
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