How Grading Your Customers Improves Your Cash Flow

One of the important metrics that can revolutionize your accounts receivable process is grading your customers.

Assigning your customers grades based on their overall payment performance can make a huge difference when it comes to using metrics to adjust behavior. Your perfect customers may not need reminders, although it never hurts. Your less-than-perfect customers may remember to pay with a gentle nudge. Then there are the delinquent accounts; knowing who they are and who they are likely to be ahead of time allows your AR team to ramp up reminders or start a payment plan early to encourage that customer to pay on time.

Not to mention you can track how many days between invoicing and payment, how many overdue invoices are still out, and how many clients you’ll need to pay on time to make sure you have enough cash in hand to pay your own bills.