Finding the right balance of when to remind customers of open invoices can be tricky. You don’t want to be annoying, but you also need to be paid on-time. In this sense, it is generally better to err on the side of being early and frequent with reminders. The adage that the early bird catches the worm holds true for payment reminders and collections.
Contact Customers Early and Frequently
For large invoices, contact customers one week after the invoice has been sent. Opening lines of communication early, sets a precedence for a streamlined flow of information to and from the customer. Tell the customer you are just checking to ensure that it has been received and everything looks correct. By taking similar steps a week later for smaller invoices, you can increase your cash flow and improve your customer relationships.
If you wait until an invoice becomes past due to verify that it was received and accurate, you may miss the customer’s accounts payable (AP) check run and lose 30 days or more if there is a problem. It’s unlikely that customers will notify you of invoice errors, or if an invoice was not received. Early and frequent customer contact is the best way to ensure there are no obstacles that will delay payment or create a dispute. Unresolved disputes can lead to unhappy customers and accounts receivable (AR) write-offs.
Keep Customer Communication Simple
Frequent calls or emails for open invoices can become obnoxious for customers, so it is key to catalogue their communication style and frequency preferences. Leveraging AR automation tools like an online customer portal gives you the tools to know your customer’s payment history and habits, and their (and your) preferred timing for automated payment reminders.
Online customer portals provide a channel for constant communication with customers and stakeholders while facilitating dispute resolution and on-time payments. With customer portals, you are always in communication with customers, so there is no need to be concerned about when to contact.
With automated accounts receivable you can automatically send payment reminders in advance of due dates, and when invoices are past due. Customer payment history can be used to program reminders that fit your customer’s payment habits.
Digital Solutions to Streamline Reminders
Integrated AR and AP technology keep vendors and customers connected through cloud-based portals and digital processes, ensuring the real-time status of open invoices.
With a connected accounting solution, your accounts receivable and accounts payable teams can coordinate with customers and vendors, you can go digital and enjoy the benefits of office automation.
Lockstep Collect, a leader in cloud-based connected accounting solutions, can help you boost productivity and optimize cash flow with:
- Automated Communications
- Customer Self-service
- Collections Activity Management
- Reporting & Forecasting
Lockstep Collect is an experienced software partner that can help you increase efficiency and accelerate cash flow.
If you would like to learn more about how you can benefit from connected accounting solutions, please contact Lockstep or visit us at www.lockstep.io