Accounts Receivable Management: How do I deal with a late paying customer?
Your company is doing exceptionally well in terms of business and everything looks great on paper.
Still!! Are you facing a cash crunch due to late or delay payments from the customers?
It may happen due to struggle to get payments from the customer on time or improper credit terms or significant time lag between the delivery of the products or services and receipt of payments.
An efficient and effective receivables management system helps to handle the late paying customers.
Whether you are running a business or a startup, there are various ways to tackle the late paying customers. Knowing how to expedite you payments would help you to strengthen the cash positions.
Follow –up Plan:
Early and quick response as soon as customer’s invoice amount becomes past due is better. The longer you wait for payments, the delay in payment is likely to happen more.
You must have a proper follow –up for chasing payment for better accounts receivable management. The follow-up plan must start a few days after due date and continue till the receipt of the payment.
Send an email:
You can write an email to the customer regarding the delay in the payment of the invoice amount. Write an email template to keep your message consistent and reduce time to pursue late-paying customer every time. When writing an email to the customer, make sure to keep the tone of the template friendly and cordial.
Connect with the customers’ accounts payable department:
Sometimes it’s better to contact directly to the department which is the source of the payment. Connecting with AP department will help you to prevent late payments or help to get quickly get paid as it passes the due date.
A company‘s account payable department may provide your more information regarding the process of your payment or why it’s getting delayed. There might be human or technical error behind the late payment.
Automate your receivables:
Consistently following up with the customers who pays late or chasing them via email for payments can consume your time. You and your staff/team members have better things to focus on rather on sending emails or contacting over phone call all day for payments.
Opting for cloud software and receivables management services helps you to save your valuable time. With AR management automation, your client get reminder notification and notices on the specified dates. It also works in case of escalation issues where the payment is delayed for 60 days, you might want to hold customer’s account for further issues and send invoices for collections.
Stay professional:
One of the most important thing to remember while approaching late pay clients either manually or through automated tools, the tone should be friendly and cordial. Never shout or show rude attitude to your client and avoid using threatening language in written communication.
Meru Accounting solution:
One of the best way to handle the AR management is to outsource your accounts receivables service to us. We have a dedicated team of CPAs, CAs and accountants well equipped with cloud technology and experience and expertise handling bookkeeping and accounting. We will take care of all your accounts receivables starting from automation to collection process.
Explore our service. Contact us today.
