In any small business, cash flow is crucial. It definitely pays you to stay on top of the cash you are owed. If any of your debtors are slow to pay, you need to do something about it. First look at your payment terms and make sure they have been clearly set out and cannot be misunderstood.
There are many companies available that provide the best debt collection services. This can be very helpful in ensuring that payments are made on time. You can also make your customers eligible to pay on time by adding a small additional percentage fee for late payers.
Image Source: Google
You need to have a credit policy so you don't fall into risky customers. Perform credit checks before distributing goods or services to new customers who do not prepay. Your policy should also ensure that you set realistic credit limits for each of your customers and that you check them regularly.
Run a weekly debt management report from your system to see where the problem is. If your payment terms are not met, act quickly. Don't let debt pile up or linger without your intervention. Call and remind them immediately.
With good on-site communication, one can consider whether the customer can make installment payments, as this type of agreement is better than no payment at all. You also need to decide if you want to continue supplying these customers. Find out the real reason for the delay and the decision will be easier to make.