Outstanding Receivables

Receivables are the debts owed to your company. If you’ve agreed to do business by producing goods or services and collecting payments at a later date, you have outstanding receivables until the debt has been paid.

Although outstanding accounts receivable are considered an asset, they do little to help your cash flow until payment is received. Reducing your days of outstanding receivables is one of the most important aspects of any business and can be the difference between success and failure.

How to Collect Outstanding Receivables

In an ideal world, collecting outstanding receivables would be as easy as sending an invoice and getting paid. Unfortunately, the reality often requires additional actions on your part before you’re paid.

While there’s no outstanding receivables formula per se, having a system that ensures you handle each account the same way can drastically reduce your risk of long outstanding receivables.

Send Invoices Immediately

As soon as a transaction has been completed, you should send an invoice to your client to reduce your days of receivables outstanding.

Ensure you date and send each invoice the day service is provided unless you have a prearranged agreement with your clients. Delays in invoices can lead to delays in payments or even, in extreme cases, no payment.

Ensure Your Invoices Clearly State Expectations

If your expectation is to be paid within 30 days of your invoice, state that on the invoice. Never leave an invoice open to interpretation or give customers unlimited time to pay.

Use clear and precise wording about your payment expectations: “Due Upon Receipt” or “Due Within 30 Days of Receipt.” This leaves no room for interpretation.

Send Reminders to Customers With Outstanding Accounts

Send a gentle payment reminder through email or text message to any customer that has not paid within your set time limit.

To mitigate your risk of receiving late payments, you can also send reminders to clients before the due date. This prompts customers to review their outstanding debts and shows them your company is organized and has an invoice tracking process.

Initiate a Phone Call For Unpaid Invoices

You’ve sent your initial invoice, a follow-up reminder, and a client still hasn’t paid. Now what?

Not all clients who don’t pay are doing so maliciously. A phone call is a great way to uncover why payments haven’t been received. Phonecalls can reassure you your customers still intend to pay for the product or goods they received.

Automate Your Receivable Process

Automation is a great, cost-effective solution to ensure your company gets paid promptly. Without automation, your AR team will spend a lot of time:

1. Creating invoices
2. Tracking accounts
3. Communicating with clients about outstanding debts
4. Processing received payments

Most of these tasks can be completed automatically with the help of software that is specifically designed to unburden your AR teams.

Improve Your Receivables Process With Gaviti

Ensure you’re paid on time through state-of-the-art automation software specifically designed for medium and small businesses. You’ll benefit from automated tracking, real-time performance metrics, and a higher efficiency level.

You can reduce your outstanding accounts receivable by 60% when you choose Gaviti for your AR software solution.

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