10 Tips to Improve Your Accounts Receivable Ratios
By Jon Orr, Managing Director, Optimas Financial & Accounting Solutions
Improve your accounts receivable key performance indicators and increase cash flow by reducing the average days it takes to collect your receivables with these strategies:
1. Send invoices promptly – preferably the same day you ship a product or provide a service.
2. Make sure your invoices are going to the right person. This cuts down on delays and avoids the misplacement of the invoice.
3. Use email to send invoices and other billing correspondence. Regular mail adds days or weeks.
4. Send the client a statement listing all outstanding invoices each time you send them a new invoice.
5. Call on invoices outstanding longer than 30 days. A personal phone call is harder to ignore than a letter in the mail or an email.
6. Put a due date on each invoice. Many companies will pay according to due dates.
7. Reduce the time allowed for payment of invoices. If you offer 30 days, consider reducing to 10 days.
8. For severely delinquent invoices, call the client personally and offer a discount for immediate payment or a payment plan. If the client still hasn’t paid, send invoices to a collections company.
9. Make it easy for your client to pay you. Use a bank lockbox, or find a service (Bill.Com, PayPal, etc.) that allows you to accept payments by credit card.
10. Offer discounts for prompt payment – for example, 2% discount if paid within 5 days; otherwise, full amount is due within 15 days.
If you would like more information on how Optimas can help you with your accounting and finance needs, please contact us at 630-780-1042 or email us at email@example.com.
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