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One of the key challenges while running a successful business is to deal with cash flow. Since every business model’s heartbeat lies in cash flow, it is important to draw immediate attention towards late invoice payments whether small or large. What might seem like a small amount which would not do much damage to the business, the journey of that amount becoming an unmanageably hefty amount won’t be too long. This major cash void in the business system would not only look ugly on papers but also ruin an otherwise successful business. For cash flow to become a major setback in a business, it only takes a small amount which would eventually lead to some unprecedented situations. Thus, managing late invoice payments with an invoice software would help the business escape this scenario, which is not so uncommon in the business world.
While charging late payment fee is the primary solution to such an issue, but the messaging, frequency and the customer itself are the 3 key things to be kept in mind when sending reminders. Although the person/business who owes you a certain amount is running behind the given time, it is awkward to design an appropriate message to ask them to make the payment. To avoid any awkward situations which might also impact your business relationship with the customer or vendor, it is advised to intimate them beforehand that in case of late invoice payment, you hold the authority to charge them a late fee.
By following simple guidelines to intimate the customer about them not making their payments on time, you can escape from entering this rabbit hole yet not irritate your customer/vendor and damage your relationship with them.
Businesses can escape late invoice payment scenarios by offering incentives persuading payments which are made on/before the due date. Any discount is a good discount and this approach will build an excellent rapport with the customer/vendor and cash flow will remain unaffected. Advance payments and locking a certain amount would also help companies to manage overdue accounts and eliminate chances of any kind of cash flow mistakes. Your invoice software will enter the data accordingly and give the result at the end of the balance sheet accordingly.
There are certain things to keep in mind while managing overdue accounts:
It is best to weigh the availability of resources and check the history of the company/customer you are dealing with so that all these unnecessary hassles can be avoided and cash flow remains unaffected.