Accounts Receivable can be a beautiful part of your sales process. A customer commits to working with you. You provide the service or product. Then the customer has 30 days to pay for it. Sounds great, right? Well, as most of you probably know, collecting accounts receivable in a timely manner is one of the key components to a healthy cash flow for your small business. If you are struggling with collections for your customers, it could mean the difference of whether you make payroll next month. To avoid going out of business and to stay on top of your accounts receivable customer balances, here are 7 friendly tips that will actually get you paid faster and bring cash back into your business. Tactic #1 – Keep a Schedule of When Payments Are Due Right now, do you know how many clients have open balances over 90 days? If so, do you have the contact number and email for each of those customers? In order to get a better understanding of where your money is, you are going to need to create a schedule of who owes you what and how long this money is overdue. Then, add a column to include the contact information of each overdue client and if you spoke with them about their open balance in the past 30 days. This schedule will be your go-to guide when trying to collect your cash. If you are using Kashoo, check out the accounts receivable report. Tactic #2 – The Power of a Follow Up Once you have the schedule completed, it’s time to start contacting your customers. Go down the list one-by-one and send either an email or call them directly. Don’t forget you can use the Customer Statements in Kashoo to send them all of their outstanding invoices. Document the progress and the outcome of your actions. For example, if you left a voice message, document that you called and left a message on that particular date. Then, follow up with an email within 24 hours of that phone call. Continue to either place calls or emails with your customers until you have received a response or collected the funds. Here is a basic follow up schedule to use: Day 1: First follow Up (+2) Day 3: Follow Up (+4) Day 7: Follow Up (+7) Day 14: Follow Up (+14) Day 28: Follow Up (+30) Day 58: Follow Up (+30) … (from there on, once a month). *The “(+ number)” means the number of days to wait until you should follow up again. Tactic #3 – Do Your Research If your customer’s phone number has been disconnected or an email does not work, it’s time to go to the world wide web to figure out how to contact them. When searching for a client name or company, go to Google and search for the company website. Usually, they have a “Contact Us” section with a phone number or email. Or, head over to LinkedIn to search for either the company name or the client name within the advanced search section. Most professionals include contact information directly (email, phone number, etc) on their profile. LinkedIn is another great tool to use to find the right information to collect your cash. Tactic #4 – Provide Different Payment Options Ok, you’ve found the contact information, and you’ve called your customer. But they tell you they can no longer pay with a check or that they need to pay with a credit card. Make sure you have a plan that outlines how you will offer different payment options. For example, if the client is more tech savvy, you can send them a PayPal link of the invoice so they can process their payment. Or, if your client wishes to mail you a check, have an address ready to share with them as soon as possible. You want to try to avoid any reasons why your customer cannot submit payment to you. Create the play and put the proper processes in place to make it easy for them to pay you. Tactic #5 – Shorten Your Credit Terms (I.e. From Net 30 to Net 15 Days) At the point of the sale with your customer, it’s up to you to offer credit terms if your customer is not paying you in full. You can decide whether you want to offer them 60-day payment, 40-, 30- or even 15-day payment terms. Check out how to create new credit terms in Kashoo. If you start to shorten your credit terms, you will be able to charge late penalties or offer a discount to paying early, such as giving 2% off “if paid within 10 days” for example. Figure out what will work best for you and your customers, but remember, it’s ultimately up to you to collect these funds. If you shorten your credit terms, you will be able to collect your cash much sooner than expected. Tactic #6 – Ask for the Card on the Call As previously discussed in Tactic #5 – Shorten Your Credit Terms, you have the ability to shift which customers pay sooner than previous ones. For example, if you start to shift your new customers to pay by credit card or by bank transfer, you can offer these options right at the point of sale. Instead of offering to send an invoice, you can say: “How would you like to pay: By credit card or PayPal transfer?” Boom! Now you have your customer bringing out their wallet and making the payment at that time. If you receive push back, say that you can offer a payment plan, but a deposit of $(amount), is required to move forward. Now you have the customer’s credit card on file and the opportunity to start collecting some of the outstanding accounts receivable through this deposit. Tactic #7 – Keep Your Customers Happy Happy customers don’t necessarily want to short you a few bucks by not paying their bills. If you spend time offering excellent service, there is a much higher chance for your customer to be incentivized to pay you. You can even go to a bit of extreme behavior by sending over cupcakes to your best customers as a way to thank them for being a loyal client of yours. Whatever it takes! Keeping your customer smiling will be an additional bonus when you start seeing your bills getting paid on time. Have any more suggestions on how to reduce your accounts receivable balance? Reach out to firstname.lastname@example.org. We’d love to hear from you!