Collect Faster and Keep your Customers On Track
Do you find that some of your customers to whom you extend credit lose invoices or have trouble making their payments by the due date? Not receiving payments on time can really get your accounting off track, and this can affect your ability to keep up with your own bills and payments to your vendors. One way to remedy or at least cut back on this problem is to issue customer statements to those clients who can’t seem to keep up with payment to your business.
There may have been a time when you had trouble keeping up with your own invoices due to disorganization. However, you remedied your own situation by creating an accounts payable aging system and printing out regular reports so you would know what invoices were due. Unfortunately, you can’t force all of your customers to adhere to a system of accounts payable aging, but you can send out customer statements as reminders of outstanding invoices and their due dates.
Customer statements should be issued to any client with outstanding invoices, regardless of how far out the due dates are. This will give your client an accurate picture of how much they owe you, when it’s due, and how far behind they may be. By letting customers know where they stand, you will often get a faster response and payment, allowing you to keep up with your own expenses in a more efficient and timely fashion. Customer statements are generally issued either once a month or, sometimes, twice a month, so that clients are always up to date on how long they have left to pay an invoice on time.
On the part of your business, customer statements benefit from several standpoints. First, you will definitely see an increase in on time payments, keeping your customers on track and making sure that all invoices are paid on time. This leads you to an ability to pay your own bills and invoices on time, all of which should be tracked through your accounts payable aging report. Second, you’ll find that you have a better relationship with many of your clients, who will appreciate receiving customer statements, seeing it as a service that goes above and beyond the call of duty.
Also, along the same lines, issuing customer statements as a reminder will decrease disputes over unpaid invoices. Many times, a client may be so consistently late on payments or have so many outstanding invoices that you have to suspend or terminate their account. Other times, you may have to at least insist on payment upon delivery, no longer accepting purchase orders or extending credit. Instead of allowing clients to ruin your business relationship like this, it is much more civil and simple to issue customer statements that warn them of the impending danger in a polite fashion so they may pay their debts and continue to maintain a strong business relationship with your company.
Most accounting software packages have the capability of issuing customer statements available, including very basic packages like Microsoft Money. Depending on what other functions you’d like your software to have, you can find even more complex and customized capabilities in your software.