Accounts receivable management: the process

Late or non-payment of invoices by customers, is unfortunately common. And whatever the cause, it can have major financial consequences for your business. Prevent these problems, by investing in the overall process around accounts receivable management.

The impact on your business

To make your business financially successful, good accounts receivable management is indispensable. You can get so many orders from customers, if they don’t pay on time, it will negatively affect your financial situation. Good accounts receivable management helps you avoid cash flow problems and increase your company’s working capital.

Accounts receivable management process in practice

Accounts receivable management includes all the activities you undertake regarding your debtors. Everything to ensure that your invoices are paid in full and on time. Think about: sending invoices and payment reminders, telephone contact with customers and initiating collection procedures.

Unfortunately, a successful accounts receivable management process does not come naturally and can be difficult to get a handle on. A structured way of working, helps with this.

Debtor management process step by step

An established process for a 14-day payment period may look like the following:

Step 1. Send invoice

Send the invoice immediately after completing the job or service. The longer you wait, the later the payment will arrive. Clearly state the payment term on your invoice.

Step 2. First reminder

If your customer has not yet paid the invoice, send the first reminder 2 days after the due date.

Step 3: Second reminder

You send a second reminder if no payment has been made 18 days after the due date.

Step 4: Final reminder

The customer’s last chance to fulfill the payment obligation is 34 days after the due date.

Step 5: Start collection procedure: 50 days after due date

After two reminders and a final demand letter, you hand over and collection proceedings are started.

Automating the accounts receivable management process

Keeping track of this process manually takes a lot of time and energy. By automating this, you can structurally remind customers of unpaid invoices.

The benefits

• Significant work savings
• Full control over the process is maintained
• Improve your cash flow
• Track the status of all invoices

Request the free demo

Payt offers several solutions to make software work for you. Discover the possibilities for your business? Then request the free personal demo now!