How businesses successfully manage their accounts receivable

• Screening of every customer: If you are dealing with a customer for the first time, you are strongly advised to check your potential customer's creditworthiness with a ratings agency or credit insurer.

• Ensure risks are spread: Ensure sufficient spread in your customer base. If 80% of your turnover comes from 20% of your customers, your business will be affected by their payment behaviour. In that case, a credit insurance which offers coverage on this customer alone is a good option.

• Maintain contact after delivery: After delivery, enquire whether your product or service meets the customer's satisfaction. This limits discussion when you send reminders later.

• Keep an extra close eye on companies with a negative credit rating: Call before the end of your payment term. Check whether everything has taken place as agreed and if a payment arrangement is needed.

• Make clear agreements: Agree on clear delivery and payment terms and conditions. The latter affects your liquidity and facilitates any collection process. If your customer has its own terms and conditions, inform him that you do not accept these; do this in writing before you deliver any goods.

• Look critically at the level and duration of the supplier credit: make adjustments where necessary, such as shorten the agreed payment term for instance.

• Don't let your attention slip: Manage your outstanding receivables carefully. Know your customers and their creditworthiness. Maintain contact more often and enquire how they are doing. Moreover, take action promptly in the event of payment problems by sending reminders and payment demands.
   

Would you like to 

• Contact us
• Get a quote
• Calculate your savings with the DSO calculator
• Learn more about Atradius Collections