| | MAY 20179Consultants ReviewReviewing your AR on a weekly or fortnightly basis will sure help in reducing default customers or for sure identify the defaulting customersreceived the invoices therefore always confirm receipt of invoice.Get in touch with your long standing customers well before the due date. So that you know way before if there are any disputes and that payments will come in time.Give equal importance to late payments and always chase late payments having significant amounts, if need be charge late payment customers nominal extra charges too, be vigilant about dishonored cheques.After Sales: Is more of keeping good relation with the customer, who is paying in time, you could thank customers for paying in time by emails, a post note or through phone calls. For difficult customers you need to be assertive and educate the customer, you would stop delivery /supply when you do not receive payment by the set time With the Credit Control Policies in place, it becomes easier to manage your Account Receivables (AR), There are a few smart steps every business organization can take for overcoming the challenges.Reducing DSO: DSO is Days Sales Outstanding, it is a quick formula to evaluate how quickly or slowly a company collects on their AR. By reducing your DSO one can effectively improve its cash flow position. There are a few quick steps to be considered.a. Improve Billing: Sending out Invoices in Time, we need to understand the longer it takes to send the invoices to the customer, the longer it will take to get payment, even though you do not get paid immediately, you give the customer time to check and ask question and give you an opportunity to resolve the matter within the estimated due date. With the above an agreed payment policy should be clearly communicated as some companies want to be paid upon receipt of goods or service, while others may require a percentage of receipt and the rest later. In all, the customer needs to know when to pay and how much to pay.b. Give Incentives: Offering a discount to customers who are giving good business might result in quicker payments.c. Offer different payment methods: Cash/EFT/Direct Debit etc. Always make sure the payment terms and due dates are clearly written on the invoices.d. Do away with Bad Clients: Seriously, a customer who always defaults in payment needs no place in the business, as the time and labor spent on these bad customers can be diverted into getting potential new clients. Who might give better business and quick payments?Improving AR Productivity: It solely depends on using proper accounting systems; it helps in reducing the non-value adding activities for the collectors and focusing on communicating with customers, settling disputes and performing other activities that would expedite payments. Automating the AR process should be the right step towards Improving AR Productivity.Perform an Analysis: Reviewing your AR on a weekly or fortnightly basis will sure help in reducing default customers or for sure identify the defaulting customers. You could also be able to resolve issues before they become disastrous.In conclusion, we can say that being time bound, alert and adopting systematic steps can help in overcoming your challenges with your Account Receivables. Jyoti Kerkar
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