After sending an invoice for goods or services sold on credit, your customer might not pay by the required date. This may be due to financial constraints, inefficient payment processes or an error that occurred when entering customer data or recording payments.
Sending effective reminders for accounts receivable allows you to solve errors or agree on alternative solutions. Here is what to know:
Have a system
Your business should have a system for sending accounts receivable reminders. It’s vital to send a reminder a few days before the due date. Then, you can send another one on the due date.
If a customer doesn’t pay on the due date, you can wait three to five days to send the first reminder for missed payment. If they fail to make payment after this reminder, you can send a follow-up after five to seven days. This can continue at regular intervals. Some companies use the 15, 30, 45 days past due system.
The relationship you have with a customer can determine the system to use. For instance, your approach and timing when dealing with a long-standing customer who always pays on time may differ from handling a new client or one with a history of late payments. Nonetheless, you need a standard system that guides you.
Include all the necessary details
Your reminders should include all the necessary details about the missed payment. These include the invoice amount and reference number, the deadline that was missed, late fees, instructions for making payments and contact information. Ensure you include a clear call to action of what is expected of the customers and the consequences of inaction.
Accounts receivable directly impact a business’s cash flow. If a customer has failed to make payments after you have sent enough reminders, you may need to consider other options to collect the debt.
