5 Misses that Impact Collecting Receivables
Collecting receivables can be a real task if you don’t know what you’re supposed to be doing. There are a couple of common mistakes most people make when it comes to collecting invoices. We, at KGRN Accounting Associates, have been in the business of auditing companies in the UAE since 2003. Our interaction with multiple business organizations have allowed us to identify a few common mistakes made by a great deal of organizations when it comes to collecting payments. Let’s look at these today.
- You delay follow ups after invoice due dates
In case your customers delay payments once an invoice is due, it is essential for you to follow up immediately. If you don’t, your customers will consider it okay to delay payments and this could turn into a trend. It may even reach to a point where the customer has spent all of his money and is now unable to pay off his dues to you.
- Lack of good documentation
It is extremely difficult and highly expensive to enforce a verbal agreement. It is essential for you to have good documentation that clearly shows the transaction between you and your customers. Make sure you are getting into business with a legal entity with creditworthiness that is acceptable. Ask them for a credit application that you can scrutinize to determine how authentic they are. If they refuse to provide you with the proper documentation you need before getting into a contract with them, you can be sure that you may never get paid back once they get access to your products or services.
- No special treatment
You may have problems with other customers who pay on time because of your lenient attitude to other customers. Providing special treatment to other some customers can mess up your efficiency, cause receivable collection problems and even result in bad debts and major losses. By treating all your customers the same you can effectively derive payment when it is due.
- Delays in the resolving of disputes
Payments are delayed and even written off in case of unresolved disputes. The faster you resolve the issue the sooner you will be paid. If you delay things. it will become almost impossible to collect the entire amount owed to you. After a long period of time your staff may change, documents may be misplaced or people’s memories change. So it is best to strike when the iron is hot.
- Incorrect invoices
Sending the wrong invoice to your customers will cause problems for the both of you. Customers who receive incorrect invoices may delay payments because of the discrepancies in their invoice. In case you haven’t charged the correct amount in the invoice some customers may take advantage of that and pay you less. Either way, you are hurting your own business. Make sure you check out your business administration section to ensure they are functioning efficiently, so that you don’t have to do things twice and deal with the high risk of not being paid.
If you would like to know more about how we can manage your company auditing and help your business grow without any limitation, contact us today. Our team of qualified and skilled charted accounts has a notable presence in Dubai, Melbourne and even Chennai, giving us additional understanding of how international business auditing works.