Are you an Accountant or Collections agent that constantly gets stuck dealing with customers who do not pay on time? Within this article, you will learn various ways to prevent your company from having past due payments. The most important item to remember when dealing with past-due payments is not to panic or get upset. Always stay positive, even if you become frustrated with the extra work involved in collecting payment on past due invoices. When signing a new contract, it is critical to discuss certain matters such as payment terms. After agreeing on the total payment amounts, you should discuss payment methods. Determine up front where and how invoices should be sent and how payment will be made. Sometimes customers even enjoy this conversation when you offer them multiple payment methods to choose from, whether it be credit card, eCheck, or direct ACH bank transfer.
Another way to ensure that payment is made on time is by cleaning up your invoices. Customers are more likely to pay invoices when they understand what exactly they are paying for. All invoices should include the following items: Clin Numbers, Descriptions, Qty, Unit Price, Total Price, Timesheets (if applicable), PO Number, and Contract Number. An additional vital piece of information you should include is payment terms. Payment terms are a topic you should inquire about before signing any contracts. However, most payment terms are Net 30, which means the customer has agreed to make payments on valid invoices within 30 days of submission.
Not only should you have a conversation with your customer regarding whom to send invoices to, but you should also confirm alternate contact information if that person is not available. If you have followed the precautious steps above and you still find yourself having to make a payment inquiry, be sure to include the following information in your vendor payment inquiry: Invoice number; Date of Invoice; Invoice due date; Agreed upon payment terms; Amount owed; Instructions for payment; and finally, your contact information.
Revolutionary Solutions recommends sending Vendor Statements once every two weeks to all customers who have past due invoices. We recommend that you have a collections agent send individual reminders regarding each past due invoice on the day payment is due, 15-day notice, 30-day notice, and a 60-day notice. Another effective method is to send your customers who often forget payment dates a reminder email two weeks before the payment is due. If you have any additional questions regarding how to follow up on past-due invoices, please contact us and speak to one of our expert collection agents.
“Accounting is the Language of Business” – Warren Buffett
Brittney Floyd, Revolutionary Solutions, LLC.