You have put items on sale several months back, thus enticing customers to come and buy products from you. On top of that, you also allowed credit payments for big purchases. You made big sales on the said day. Isn’t that exciting? What comes next with all the excitement you felt because of the sales increase? Well, it is going after overdue credit payments.
These credit payments will definitely affect your cash flow. In reality, about 49% of those credit amounts are often paid late. The sad thing is, once the invoice gets 90 days past due, the chances of getting paid in full will be slimmer. How do you handle overdue credit payments effectively especially if you are a small business? Here are tips to help you with.
Establish Credit Policies
Before even offering credit terms to your customers, you have to make sure that you have a policy behind this. There should be an existing credit policy, clear enough for your customers to understand, and states how you can collect overdue payments thereafter. If you opt to accept credit card payments, you have to make sure that it will be to your advantage later.
Part of the things to consider here is how much credit you can afford to offer to your customers. See how that credit policy will affect your cash flow. Also, you must decide which customers will qualify for your credit terms. From there, you should be firm with your payment terms, including making official policies on what will happen in case the account goes overdue. Make sure that your customers follow the credit application process.
Track Payment Patterns
There are many ways to do this. One is to make sure that the client is consistent when making payments. It is not enough that customers used to pay their dues on time. You should check that they are still paying the same way they did and not being late two months ago, and even later the month after that. Otherwise, you can take any late payments from that same client as a sign of financial distress. You may want to reevaluate credit terms and limits depending on the client’s capacity to pay.
Communication Is Key when Dealing with Overdue Credit Payments
As a business owner, you should have the power over your credit payments. You will only be able to do that if you have the right tools, and you use processes that make handling overdue payments more effective. Always send your client a message to remind them to make payments. Be very patient when talking to them over the phone. Reiterate the possible consequences of non-payment. It will also be wise to offer early payment discounts to entice them to pay on time.
Invest in Versatile Payment Processors
You have to expand your payment options too, just to ensure that there is a channel most available for your clients. Sometimes, you do not have to pay for separate systems for mobile payments, credit card payments, and online payments. There is the CLOVER® GO, for instance, which can be used to swipe magnetic credit cards, use chipped credit cards, access online wallet systems, and make mobile payments via NFC technology. This prepackaged system comes with everything you need to accept various payment methods.
If you want to get rid of overdue credit payments for your business, you just have to abide by the tips above. That way, you will be able to manage your cash flow more effectively than ever.