Reduce Overdue
The Best Ways to Prevent Overdue Accounts
Overdue account is an account whose holder owes money that should have been paid earlier. Overdue account have a significant effect on an organizations cash flow, effective management of accounts receivable is important to achieve strategic advantage through improvements in customer service, cash management and reductions in costs.
Preventing account overdue is important in achieving the desired cash flow outcome through the timely collection of outstanding debts.
In other to prevent account overdue an organization should provide its customers with alternative payment methods. Availability of payment option help customers to choose a convenient payment method that suit them and reduces their account …show more content…
The report shows the customers historical payment data and how they pay their bills. Organizations are most likely to do business with customers with who don’t have perfect credit history because there are not many companies with perfect credit but companies must lay down strict payment term and enforce these terms to avoid cash flow problems. Companies should monitor new customers with less than perfect credit and also laid down the credit rule of the company early and firmly from the start of the business. Companies should keep the amount of product they offer to less than prefect credit companies at a minimal level until they have proven themselves. For example company A is starting business with company B which do not have a perfect credit. Company A must first laid down it the credit rule to company B and then start by selling few items on credit and monitor their payment behavior before increasing the amount of product they offer on credit. Also company A must be sure they receive payment for first credit they offer to B before extending any more product on …show more content…
Offering incentives for early payment is a great motivation for many customers and a large percentage will take advantage of the incentive. People like to save money and providing slight discount would make them make timely payment. For example a company may give a 5% discount for payment of account within two to three days, 3% discount for payment within four to five business days. This gives customer the option to try to work thing out to save money, they know that even if I’m not able to make payment in three days I can still save money by making payment within the fourth and fifth day. On the other hand late fees is a disincentive that prevent customer from incurring more debt by making payment on time to prevent their account being overdue.
For example a company may impose a 5% late fee on payment overdue within 10 days and 7% late fee after ten over the due date. Majority of customers may not want to pay more than they owe and will try to avoid late fees by making payment on
Overdue account is an account whose holder owes money that should have been paid earlier. Overdue account have a significant effect on an organizations cash flow, effective management of accounts receivable is important to achieve strategic advantage through improvements in customer service, cash management and reductions in costs.
Preventing account overdue is important in achieving the desired cash flow outcome through the timely collection of outstanding debts.
In other to prevent account overdue an organization should provide its customers with alternative payment methods. Availability of payment option help customers to choose a convenient payment method that suit them and reduces their account …show more content…
The report shows the customers historical payment data and how they pay their bills. Organizations are most likely to do business with customers with who don’t have perfect credit history because there are not many companies with perfect credit but companies must lay down strict payment term and enforce these terms to avoid cash flow problems. Companies should monitor new customers with less than perfect credit and also laid down the credit rule of the company early and firmly from the start of the business. Companies should keep the amount of product they offer to less than prefect credit companies at a minimal level until they have proven themselves. For example company A is starting business with company B which do not have a perfect credit. Company A must first laid down it the credit rule to company B and then start by selling few items on credit and monitor their payment behavior before increasing the amount of product they offer on credit. Also company A must be sure they receive payment for first credit they offer to B before extending any more product on …show more content…
Offering incentives for early payment is a great motivation for many customers and a large percentage will take advantage of the incentive. People like to save money and providing slight discount would make them make timely payment. For example a company may give a 5% discount for payment of account within two to three days, 3% discount for payment within four to five business days. This gives customer the option to try to work thing out to save money, they know that even if I’m not able to make payment in three days I can still save money by making payment within the fourth and fifth day. On the other hand late fees is a disincentive that prevent customer from incurring more debt by making payment on time to prevent their account being overdue.
For example a company may impose a 5% late fee on payment overdue within 10 days and 7% late fee after ten over the due date. Majority of customers may not want to pay more than they owe and will try to avoid late fees by making payment on