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Tips for Better Cash Flow and Less Collections 

There is one common thread to all businesses: they need money. Now not all are short on money, not all struggle with paying their bills, but if a business stops bringing money in eventually they fail. 

Similar to the way most people make purchases on credit cards instead of with cash, most business make purchases on account. But how do businesses collect on those accounts? 

How do they make sure they get paid?

Deliver Invoice Electronically

To avoid a mail delay email invoices electronically and ask at the time of purchase which email address the customer would like the invoice sent to. By delivering invoices electronically the company sees their invoice immediately after a purchase. This way you don't have lose days with the invoice and the payment being in the mail. 

Additionally, if invoices are delivered electronically, it then make sense to shorten the payment terms.

Offer Discounts for Early Payments

Offering a discount does not mean you have to lose out on money. Many companies raise their price by two percent so that they can discount it back down to what price they desire. Then if a company doesn't pay in the desired time you get a bit of extra money. By offering an incentive to pay early, your invoice may be moved to the top of the pile for the paying company. The traditional discount is 2%/10, net 30 Days, however the net days can be shorten now because of electronic payments. Twenty days is acceptable now that mail doesn't have to be factored in. 

Multiple Payment Options 

Having multiple convenient electronic ways to pay right on the invoice makes the payment much more convenient for the customer. Electronic Funds Transfers are common now for businesses. Including EFT, Paypal, and/or credit card options on the invoice makes payment convenient and hopefully faster. All of the methods are also instant. Checks take time to arrive in the mail and then turn around and deposit in the bank. 

Establish Credit Policies & Maintain Records Before extending credit options to customers take a look at their past payment history to you and other businesses. Look at their ability to pay. Possibly perform credit checks on the business. Additionally, keep records on their payment history to decide if you will let them pay on account in the future. 

Follow-Up with Phone Calls 

Following up with a phone call if there is not a payment in a reasonable amount of time accomplishes a few things. First it insures that the company actually received the invoice. Secondly, letter and emails don’t make personal contact with the business. If there is a problem in producing the payment a phone call will make them confess to what is happening. Doing this a polite manner will help to produce trust. Good customer service leads to good business. 

While it is quite impossible to get every customer to pay, following these best practice tips can help bring it the money owed to company and hopefully increase that bottom line.  

By: Katie Rupke 

TEKOA ERP Software 

Web Portal Software

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