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An accounts receivable department is crucial for your business’s success. They are responsible for paying employees, dealing with daily expenses and contribute to the growth of your company, but an accounts receivable department cannot do all of this is invoices are being left unpaid.

It is vital that you attempt to make your accounts receivable department as effective as possible; having a stable cash flow is crucial for your success. There are some simple steps that you can take to ensure you are doing as much as possible.

Credit reporting

Before you begin a relationship with a new client it is a good idea to carry out a credit check on them. This will give you an idea about their payment history and how they conduct their business. You can also follow-up with previous companies to discover more about their relationships. You may discover that the client has a string of unpaid credit which is a strong indicator that they are unable to manage their finances, or they are struggling financially.

Carrying out a credit check on a client provides you with enough knowledge to make an informed decision regarding payments. You can decide if you want to begin a business relationship, offer more feasible terms so that the client is more inclined to make a payment or even ask them for a deposit for the work up-front. Whatever you decide, a credit check can support your decision.

Payment terms

Ensure that you make your payment terms clear from the outset. If a client knows your bottom line then they are less likely to push the boundaries. Make your payment terms realistic and reasonable, the more accommodating you seem, the more your client will notice. Provide a quotation or estimate of costs before you commence work, by accepting your quotation the client will have a better idea of what they will be required to pay out when your invoice arrives.

Get online

Technology has changed; there is no need to rely on post to get your invoice paid. Payments can be received faster, and in real time. Send your invoice to the client as soon as the service has been completed; this gives the client ample time to prepare to pay the invoice. If you send the invoice electronically, request a “read receipt” to ensure that the client has received and opened the invoice; you should follow-up with a phone call too. This will improve client-business relations, as well as ensuring the client has all of the details to make a payment.

Give some options

You can improve the likelihood of being paid on time when you offer more than one way to be paid. Cheques are out of favour, but it is your choice if to accept them or not. Include your bank details so that the client can pay by BACS and consider using PayPal as an alternative payment method. If you are offering a regular service and the price is unlikely to change then you may want to think about direct debits or standing orders. The more options you have, the easier it is for a client to pay you.

Get a second opinion

Consulting a third party can be beneficial when it comes to invoice collection. A good collections agency will have experience of dealing with late payers, and will work to industry best practice to ensure a payment is received. You can use a collections agency to ease the pressure; they can chase difficult clients while your accounts receivable department can focus on building relationships with clients and other daily tasks.

At Commercial Domestic Investigations we offer a range of services, including credit reporting and invoice collection, to assist your accounts receivable department to run more efficiently. To find out how we can help your business, contact our team on 08444 159200, use our online contact form or email

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