If you’re like most business owners, you’re always looking for ways to improve your bottom line. One area you might not have considered is your accounts receivable (A/R). Your A/R is the money that customers owe you for goods or services they’ve received. If you’re not getting paid in a timely manner, it can have a serious impact on your business cash flow.

There are a number of reasons why customers might be slow to pay or delinquent on their payments. In this blog post, we’ll take a look at six of the most common A/R challenges and what you can do to solve them.

1. Lack of Communication

One of the most common reasons for slow payments is a lack of communication between the business and the customer. If the customer isn’t aware of how much they owe or when the payment is due, they’re likely to delay payment. To avoid this, make sure you send invoices as soon as the product or service has been delivered. Include all relevant information, such as the invoice date, the due date, and any applicable late fees. You should also include your contact information in case the customer has any questions.

2. Long Payment Terms

Another reason customers might be slow to pay is that they have long payment terms. For example, some businesses allow customers 60 days to pay their invoices. While this may seem like a good way to keep customers happy, it can actually lead to cash flow problems down the road. If possible, try to negotiate shorter payment terms with your customers. This will help ensure that you’re paid in a timely manner and don’t have to worry about carrying large amounts of debt on your books.

3. Overdue Accounts

If you have customers who routinely pay their invoices late, it’s important to take action so that it doesn’t become a habit. One way to do this is by charging interest on overdue accounts. This will serve as a disincentive for customers to pay late and will help offset some of the costs associated with carrying debt on your books. You can also consider implementing a collections policy whereby customers who consistently pay late are turned over to a collection agency. This should be done as a last resort, but it can be an effective way to get delinquent customers to pay up.

4. Lack of Documentation

In some cases, businesses fail to collect payments because they don’t have adequate documentation. For example, if you didn’t get a signed contract from a customer or if there’s no record of the delivery of goods or services, you may have difficulty collecting payment. To avoid this problem, make sure you always get a signed contract from customers and keep detailed records of all deliveries made. These records can come in handy if there’s ever any dispute about whether or not goods or services were actually provided.

5. Unclear Invoices 

Another common issue is unclear invoices. This can happen when businesses don’t include all relevant information on their invoices or when they use confusing jargon that the customer doesn’t understand. To avoid this problem, make sure your invoices are clear and concise. Include all relevant information, such as the invoice date, the due date, and any applicable late fees. Use simple language that anyone can understand. 

6. Poor Customer Service 

Finally, poor customer service can lead to slow payments. If customers are unhappy with the products or services they’ve received, they may be less likely to pay in full and on time. To avoid this problem, make sure you’re providing high-quality products and services that meet customer expectations. Additionally, make sure your employees are trained properly and are polite and professional when interacting with customers. 

Fix These Accounts Receivable Issues and Watch Things Fall Into Place 

Slow-paying or delinquent customers can have a serious impact on your business’s cash flow. There are a number of reasons why customers might be slow to pay, including long payment terms, lack of communication, overdue accounts, lack of documentation, unclear invoices, and poor customer service. 

To avoid these problems, make sure you send invoices as soon as products or services are delivered, including all relevant information. Use simple language that anyone can understand, provide high-quality products and services that meet customer expectations, and train your employees to be polite and professional when interacting with customers.

And if you need professional accounts receivable support, look no further than Southwest Recovery Services. We’re here to help with business support and debt recovery. Contact us today for more information.