The most common and serious annoyance and discouragement faced by many entrepreneurs these days are the overdue receivables. Although it is a problem faced by many, it can also be very easily avoided. Usually, the problem arises when certain things are not clarified. The purpose of this article is to tell you how to say goodbye to overdue accountant receivables.
The root cause of all problems comes down to a certain pattern which you can clearly see if you have been in the business long enough. The most basic mistake is when a sale is made to a client and there is no or very little emphasis on the terms and conditions for payment. Also when a service or product is delayed or fails to meet the customer’s expectancy there are high chances of overdue receivables.
In some cases, the client holds all the pay until the product is delivered with perfection meeting all the requirements and expectations of the customer. This can lead to tension on the management side since there is a lot of reworking to be done, which eventually leads to an exchange of tensed words between both the parties. This ends up towards a disaster as there is a mutual disrespect among both the parties. If you read the pattern closely all the problems start when there is no emphasis on the payment terms.
Overdue receivables not only wastes the cost and energy of the management team but also makes you lose a client and your will is lost, also the client will speak negatively about you in the market due to which you will lose a lot of repeat orders and potential clients. The expenses during the period in which payment is overdue become too burdensome in the financial aspect of the organization. This is just a highlighted part of a bigger picture, there are so many other negative aspects of overdue receivables.
Now the question is how to avoid the cycle of overdue receivables, there is a certain way in which you can actually avoid being in a tough spot. The first and foremost thing to do is asking for down payments before the actual project starts, this can be implemented on any industry be it construction, textile, retail, healthcare. This also allows you to become aware of customers that might not pay you after receiving the order. The ones willing to pay small amounts beforehand will not look pay someone else to do the job once they have invested a little amount.
Another thing that can be done is to clarify all the terms and conditions of the payment with the client beforehand. This is the job of the sales team, their job is not only limited to selling the product, but they also have to ensure that all the details regarding the payment are discussed beforehand before anything is decided. Although other people can handle this job it has a bigger impact if the salesperson does it.