There are 3 major accounts receivable challenges every business faces. A magic fix for them all doesn’t exist yet, but there are some simple methods that could make these challenges seem much more manageable.
How do I reduce my Days Sales Outstanding (DSO)?
Having trouble getting paid on time? Try to make sure that you are sending the invoice as soon as possible (if not delivering it with the product), and be sure to follow up and check that the correct person has received the invoice. Remember that online payment is a must-have option! The easier it is for clients to pay, the more often they will. Reminding your clients a week before the due date can also improve your DSO (this is much easier with automation). Another option worth considering is providing rewards for on-time payments, as well as penalties for late ones; like late fees, or loyal customer perks!
How can I optimize mine, and my staff's time?
Automation can be your best friend here. The more things you can get a computer can do for you, the more energy you can exert into something else. Automated reminders, invoices, and payment notices can take care of the more tedious processes, leaving more time for your staff to focus on big picture goals. Take a look at the system you have for that department, does the process make sense? Can it be streamlined? Check in with your staff for these questions! Chances are there's at least one person sitting there thinking “If only we did it THIS way…”
Reducing Risk of Bad Payments
A credit check on the company you are going to work with is usually a good place to start. If you aren’t doing that beforehand, consider investing some time into a little bit of research prior to creating partnerships. Are you asking for credit references? If so, are you actually calling them? These can be a great ways to quickly sift out the companies who purposely pay late.