It’s straightforward, you invoice the customer after completing the work and they pay you. In some cases, you may end up waiting longer than expected to receive payment.
So why does this happen?
Some customers pay right away when the job has been completed, and others pay after you’ve followed up with them several times. Then, there’s the few who don’t pay and the account becomes overdue.
Before you start collecting, it’s best to investigate why there’s been a delay in your payment. It could be that the customer believes the job is not fully complete. Usually, the customer will not tell you they’re waiting for an outstanding item or service. They just don’t pay.
How do I reduce my accounts receivable and prevent overdue accounts?
It starts with your customer relations.
Use your accounts receivable to help strengthen customer relationships. Create an AR aging report and sort it by the oldest outstanding invoices. Use this list to call your customers with the purpose of fostering a relationship, not to collect payment. Building a rapport with your customers is helpful in identifying potential overdue accounts. Here are some questions to ask during these calls:
- How was our service?
- Any suggestions on how we can improve our service?
- Are there any outstanding issues to resolve?
If positive answers are given, then almost as an aside, ask if there is any reason for the outstanding invoices.
At times, these questions may result in you needing to do something to complete the job. The goal here is to ensure that the customer is satisfied with your service. Agree to deliver on any remaining items and follow up with them at a later date to see if the work is done. When following up, you will have the opportunity to bring up any outstanding invoices if it hasn’t been paid already.
Posted on November 18, 2013 by Al Romeyn | Permalink