“Diligence is the mother of good fortune. ”? Benjamin Disraeli
Sound account receivable processes are a part of an effective bad debt risk management system. Standard processes and procedures would allow your business to first manage risk rather than bad debt. Remember:
• Billing and sending invoices out timely, is the 1st MUST of every business.
• Sending proactively regular Account Statement is a 2nd important step!
Here are the benefits of sending out accounts statements:
• Statements remind clients of their outstanding accounts.
• Statements summarize your periodic business activity & help your B2B clients reconcile and process your payments faster.
• Statements help clarify the financial transactions. Not only does it inform but it will help those individuals who are forgetful and those who are not figure-oriented.
• Statements help get your payment faster especially if you communicate effectively and ask them courteously.
• Statements prompt an unsatisfied client to come forward faster with a query they might have been considering that will help you assess their issue and as an opportunity to improve your relationship with them.
• Statements help your business identify account problems FASTER than any other tool available.
There might be times that you will be discouraged about sending out account statements. Below is a list of myths that can hinder you from sending out regular accounts statements and why you shouldn’t believe them:
Myths about sending Account Statements Out and what you should know about them:
Myth #1: Our business will be considered “Aggressive”
Sending out accounts statements is the responsibility of your business. This is to update your clients as well as to make sure that you can help them avoid any possible problems regarding accounts. Remember, when you are sending out regular accounts statements, you are being ethical and considerate in doing business with your clients.
Myth #2: Our regular “clients might get offended” with too much focus on money issues
Having a great business is how clearly and purposefully you relay your messages to your customers. Feel good about letting them know the different benefits you offer each month on your regular accounts rendered, the ones that are being offered exclusively to them. In this way they will see your statements not as asking something form them – but because you can offer something to them! You can also send regular updates about your business as a part of your Accounts Rendered Statements.
Myth#3: Our business does not have time to do this – we have sent bills already
Your client’s bill and their account statements are two different things. A bill is a list of payable items or services that the client owed you while an account statement is the status of his or her account. Accounts Statements will include not only the amount they need to pay but also all other information such as the payment they already made, the remaining balance and other financial info that will give them a picture of their account with you for a specific period of time.
Having in place a standard Credit Control System can be considered one of the major factors to achieve a steady business cash flow. This system will have different levels of procedures which will all impact your overall receivables. Understanding the importance of sending regular account statements is one of the fundamental basics and is a part of the basic strategy you have to perfect to create an effective cash control system.