Talking Cents

What Should a Small Business Owner Do When the Invoice Payments are Overdue?

Small business owners come up with many ways to boost their sales and increase the customer’s trust in their name. They are well aware of the fact that customer relations and investing in the customer base can go a long way. However, sometimes these strategies can also have their downsides. One of these downsides is payment overdue from clients. Accounts receivable, therefore, require to be monitored regularly in order to know when this is happening and is the probable reason behind tighter cash flow.

Send Reminders

Usually, it is a good idea to send your clients reminders before the due date, so they do not miss it because of minor negligence, such as having forgotten the due date was closed or that they have not paid for the service or product. However, if you did not, then it would be customary for any business to send reminders and mail them their invoice.

Get Technical Errors Out Of The Way

Some accounts receivable are only behind on their dues due to some technical issues. Therefore, figure out if that is a problem and resolve it in a timely manner. You want to maintain cordial business relationships with your customers and hope to gain long-term customers.

Have Rules Regarding Late Payment Penalty and Add To The Invoice

It is always a good idea to add a reasonable penalty for late payments on accounts receivable as a way to encourage the clearing of dues on time. Remind the other party of the penalty due to crossing the due date by a large margin, so they act immediately.

Have Discounts For Clearing Dues Immediately

A very interesting trick to avoid the issue altogether is to make sure that you give some discounts if the dues are being cleared within five days instead of the due date, that is a couple of weeks later. This will work as a great incentive, and more and more individuals would prefer to clear the dues immediately instead of waiting till the last date. Businesses that have seasonal sales growth or which have a higher sum of money tied with accounts receivable should follow this tip.

Consider MAS Partners for your small business accounting needs

Your small business deserves to reach its potential, do not hesitate to invest in a good and experienced accountant to improve the outcome of your business. Trust our small business accountants in Sydney and Zetland to do the job. They can help you perform cash flow analysis and key performance indicators, improving credit score and a lot more. To learn more about our services, contact us here.