How to Avoid Non-Payment from Customers

Missed payments are nothing new. Several high-profile bankruptcies have been making the newsover the last few years—with seemingly more every day. And the kicker? Not even growing companies are exempt. So, how can you ensure that you are insured for your payment when the due date comes? We have some tips to help.

Tip 1: Send invoices out on a regular basis.

This may seem obvious and basic, but it really needs to be done. You need to become very predictable. Buyers can’t pay what they haven’t been billed; you need to develop your rhythm so they know what to expect. This helps both your buyers and your internal staff.

Tip 2: Use accounts receivable payment terms as a rule, not a guideline.

You may have toyed once or twice with the idea that rules are meant to be broken. They are not. To ensure you get your payment on time, you need to establish a rule early on. Payment in 30 days means 30 days. You want to be friendly but firm. Your company is a priority for you and you want your buyers to feel the exact same way. Establish your expectations early and then maintain them throughout the entire relationship.

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Tip 3: Educate your accounts receivable team.

We have often heard, “An educated customer is your best customer.” But ask yourself: What about my staff? Are you really taking the time to educate them?

Train your team why the rhythm is important, and then how to handle themselves and your invoices should someone decide not to follow the rules. Habits are like reflexes, they happen automatically. Training your team how to handle these interactions with your buyers helps them hold the line when it comes to how they work with buyers on a day-to-day basis.

Think of it this way: If your competitor has established a strong pattern and rhythm for accounts receivable collection and you have not, which company will get paid first?

Establish guidelines for their actions; help them understand what needs to be done to protect your company’s most valuable assets: Your accounts receivables.

Tip 4: Establish standards for your core accounts receivable business practices.

Everyone knows that eventually, a problem will arise, so when non-payment inevitably happens it shouldn’t be a surprise to anyone – not you or anyone on your team. Your training should also include:

  • How to generate the correct supporting documentation for your claim
  • How to generate a contract before late payment becomes an issue
  • What to do when legal action is seemingly the only course of action for you to take
  • Regularly reviewing your credit processes to see if improvements can be made and if so, making them
  • Enforcing any changes that have been made to credit processes to ensure they become a routine part of everyone’s day

Having these practices in place should ensure you are insured for non-payment—both in preparation and in actuality.

Euler Hermes accounts receivable insurance also helps protect your A/R assets in the case of non-payment. Learn More.

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