The cash flow of a business is one of the most important aspects of the business. That’s why many businesses take it quite seriously. The cash flow of most businesses comprises their receivables and payables.
A business’s receivables describe outstanding payments from customers, while payables are payments owed to suppliers. For every business to stay on the right track, they need to account for their receivables properly. These entities will need to remind their debtors about outstanding payments through regular reminders constantly. This piece will teach you how to set up recurring payment reminders and collect receivables on time.
What Are The Tips For Effective Payment Reminders?
The process of chasing down an unpaid invoice can be stressful. You’ll need to be proactive and take key steps to get all your payables in due time. The best way to do this is through a payment reminder.
A payment reminder is a notification that informs customers about any outstanding payment. These reminders may be either through email, SMS, etc. The following tips will help you make effective payment reminders;
Learn About Your Customer’s Credit History
To avoid issues with payment from your customers, you need to verify how they have handled their previous transactions. Information about previous transactions will be contained in their credit history.
Before you begin to disturb your receivables for outstanding payments, make sure to check their credit history. This would give you better insight into what to expect and how to pressure them for prices.
Decide On Follow-up Period
After revising your customer’s credit history, the next thing to do is decide on the follow-up period for your debtors. You mustn’t choose a follow-up period that’s too short because you may end up frustrating customers. However, lengthy follow-up periods may be ineffective.
Depending on the information you’ve learned from the customer credit history, you’ll need to decide on a suitable follow-up period. The follow-up period will also contain details about the frequency of payment reminders.
Include Essential Invoice Details
When writing a payment reminder, don’t forget to include invoice details. Doing so will give debtors a clear picture of how much they are expected to settle. This will also include any terms of the agreement. Invoice details to add to your reminders include;
- Name and address of your company
- Name and address of your receivables
- Invoice number and date
- Contact details of the client
- New payment terms and due date
- Outstanding payment amount
- Description of services purchased
Use A Clear Subject Line
When writing a payment reminder, you must use a clear subject line. This subject line will clearly state the content of your message before they open it. It’ll also make it easier for debtors to spot the message in their inboxes. An ideal subject line may include the following;
- Invoice number
- Company name
- Condition of the payment terms e.g, the duration for which the payment is overdue
- Call to action
Use An Automated System
There are many benefits of using an automated system to issue payment reminders. To start with, a computerized system will ensure that your receivables get automatic and timely reminders. All you have to do is issue instructions to the software on what to send and when to send it.
Also, automated payment reminder software will offer you several reminder templates to choose from. You could use any of them to create your reminders and forward them to clients. Going further, an automated system will allow you to have a list of all your receivables in one place.
You need to ensure that your business can collect any amount owed to it promptly. Late and overdue receivables will make it difficult for your business to meet up with the demands of daily operations. If you’ve been struggling with ineffective payment reminders, you can follow any of the tips listed above.