Manage Accounts Receivable

Strict accounts receivable management

Accounts receivable management requires vigilance and foresight. Here are a few tips to help you stay one step ahead of non-payers during the delivery and payment process.
 

Screen every customer

If you are dealing with a customer for the first time, you are strongly advised to check your potential customer's creditworthiness with a ratings agency or credit insurer. The granting of a rating can in itself be a service. However, it is also an important component and an added value of the credit insurance.
 

Ensure risks are spread

Ensure sufficient spread in your customer base. If 80% of your turnover comes from 20% of your customers, you are in danger. If one of these customers goes under, it will take you with it. In that case, a credit insurance which offers coverage on this customer alone is a good option.
 

Maintain contact after delivery

After delivery, enquire whether your product or service meets the customer's satisfaction. This limits discussion when you send reminders later.
Keep an extra close eye on companies with a negative credit rating. Call them before the end of your payment term. Check whether everything has taken place as agreed and if a payment arrangement is needed.
 

Make clear agreements

Agree on clear delivery and payment terms and conditions. The latter affects your liquidity and facilitates any collection process. If your customer has its own terms and conditions, inform him that you do not accept these; do this in writing before you deliver any goods.
 
Also look critically at the level and duration of the supplier credit; shorten the agreed payment term for instance.

Don't let your attention slip

Manage your outstanding receivables carefully. Know your customers and their creditworthiness. Maintain contact more often and enquire how they are doing. Moreover, take action promptly in the event of payment problems by sending reminders and payment demands.
 

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