How to collect Debt and Overdue Accounts

If you are a small business owner, collecting your debts, unpaid bills and overdue accounts can be a quite difficult task for you. However collecting debt is very important for a smooth and steady cash flow of your business. Here we are going to share some tips to deal with your business debt effectively.

Implement Effective Billing Procedures

With the help of implementing effective billing procedures you can avoid the problem of accumulation of bad debt. Invoices must be made clearly stating clear invoice numbers on them. The time period covered by the invoice must also be stated clearly on the invoice. You must state the due date and the penalties that customer has to face if unable to pay the bills on given due date.

Always follow up on issued Invoices

Make sure that your customers have received the invoices. Call your customers after a specific period of time if invoice is not paid yet. Make a steady and friendly contact with your customers until your invoice gets paid.

Always collect what you actual bill

Never ever bargain over overdue or bad debt as if once you get a reputation of bargaining over your overdue debt you won’t be able to collect the full bills ever. You can negotiate over the price or over the up-front fees in case of services but never negotiate on the final payment when the products are sold or work has been done. You can extend the due date just for a sheer goodwill but always collect what you bill if you want to earn profits at the end of your financial year.

Other Related Accounting Articles:

• How to Forecast Bad Debt
• Why Revenue Forecasting is Important
• Debentures
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