Partner Logo
Home  > Account Receivables Management
 Share  Print Version  Email

Account Receivables Management

Simple Alliance, Kenya Limited

Overdue Account Receivables

Unsettled debtor accounts could seriously disrupt your business’ cash flow. If persistent, these non-paying debtors could hamper your plans to expand your business.  You do not want to spend valuable business time running after defaulting customers. Do you? Effective debt collection measures are needed. To avoid these, and related negative impacts, you need to institute an effective billing program.   

Effective Billing Strategies

So as to ensure smooth billing, you could implement the following account receivables management tactics:

  • Prompt mailing of invoices
  • Billing the correct entity
  • Developing effective invoices
  • Consistent follow-up

Effective Invoices

An effective invoice has a number of qualities, including:

  • Asking your customer to get in touch with you in case of problems
  • Its accurate, detailed, easy to understand, and clear
  • Has a succinct summary of late payment penalties
  • Includes details like amount due, customer name and address, purchase order number,  your business’ name and address, and your ID number
  • Names a representative within your business whom customer could contact in case customer requires clarification
  • Itemises the charges so as to make it hard to contest  

Prompt Invoice Dispatch

Your promptness in issuing invoices determines the speed with which you will be paid. If you delay the mailing of invoices, you will as well get late payment. So as to optimise the payment time, you need to focus on sending out invoices one or two days after completing a project or delivering your product.   

Billing the Exact Entity

If your bill reaches the wrong entity, its payment could be delayed by up to two months. This is due to the time the bill takes before it reaches the right entity. You need to take measures to avoid this error by:

  • In case you bill goes to your customer’s accountant or bookkeeper, copy your client and make follow-up phone call  
  • Directly getting clarification from your client about the right entity to bill
  • In case your bill is addressed to an entity other that your everyday contact, make an introductory phone call before sending it out  

Steady Follow-up

Your follow-up checks whether your invoice was received and whether it is being processed. A bookkeeper could easily shelve your bill if you do not follow-up. In case you do not receive payment by the due date, call the bookkeeper to ascertain when the payment will be effected.  Conduct weekly follow-up exercises up to the time the bill is settled.    

Your small business is likely to suffer serious cash flow problems owing to overdue accounts payable. This relates to account receivables, otherwise known as accounts receivables or account receivables. To protect your business from negative ramifications, you need to set up a proper billing strategy or a debt collection mechanism. This plan constitutes an effective account receivables management program.  Creating an effective invoice system is one way of protecting yourself from defaulting debtors. You also need to send out invoices soon after completing a project or delivering goods. After sending the invoice, your consistent follow-up will ensure that your client pays up quickly. You as well need to ensure that you bill the correct entity. This caveat will protect your from late receipt of account receivables.

Copyright (C) 2016, Simple Alliance Kenya Limited

 Share  Print Version  Email
Comments &Ratings (0)
If you are a human, do not fill in this field.
Click stars to rate.
   Comments are truncated at 1000 characters