Whether your business is small or large, maintaining a good and reliable collection strategy is important to ensure the proper flow of cash. There are many factors which need to be considered before creating a streamlined collection which will help you in assisting your business, cash flow and also help you in handling procrastinated payments.
Mentioned are some of the ways that will assist you in building effective collection strategy:
i. Offer assorted payment options: Offer a wide range of payment modes to expedite collections. Some of them may be credit cards, debit cards, corporate purchasing cards etc. This procedure will help your clients make their payments in accordance to their convenience and on time.
ii. Tracking system: Creating a tracking system is an important and easy way to track payments which are overdue. This empowers you to take actions accordingly as you get to know about unpaid payments. You may also hunt for softwares specially fabricated to track payments. The softwares will display a complete detail of your customers and their last date of payment as well as the next payment date.
iii. Extended payment terms should be avoided: If you wish your collections to be on time and without any hassle, ensure that you have not extended the payment periods. You may also opt for offering discounts which will drive your customers for a faster payment.
iv. Protocols for missed payments: With the help of your tracking system, you may create a contract that lucidly enlists the payment guidelines which will prevent your clients from any sort of confusion. Post this, you can ask your client to sign the guideline as a proof to agreeing to the terms and conditions. Also, keep your clients informed of the consequences of missed payments. Follow up with a phone call which will propel them make prompt payments.
v. Accurate invoices: Make sure you are accurate when generating invoices. A minor error at your end may give your clients a convenient excuse for a delayed payment for a long time. As long as you do not rectify yourself, the payment might be withheld or may involve other hassles which will affect the payment.
Vi. Keep a record: Maintaining accurate reports is very important. This becomes critical when you have an agent or an employee doing this for you. Hold separate files for different clients with proper details for each of them. This will help the employee deal properly with the client and get the payment done on time.
So, what is your strategy for an effective collection?