For most businesses whose fiscal year ends December 31st the next few weeks will be the most stressful throughout the year.

Not only your sales team will scramble to close as many deals as possible before year-end, but your team will be under pressure to collect as many outstanding invoices as possible to present the best cash-flow results.

While keys to best collection results are prompt and accurate billing, well-defined collection policy and a strong collections management solution to run things for you, these will have to be addressed in a couple of weeks. Here are few tricks to help your organization to succeed NOW!

1. Map everything that is out there – to collect the most money in a short amount of time you must be aware of everything outstanding. Your ERP will help you with that, providing an aging report. On top of everything past due look for an upcoming invoice (let’s say ones that have December 30th as their due date) and add them to your queue. But, don’t stop there… work with your sales team to learn about the deal they expect to be signed by end of the year. While there don’t show as invoice they will be billed in the upcoming weeks. Get proactive and start working with the client on payment even before the deal is finalized to make sure you get paid by end of the year.

2. Look for best payment expectancy – while all clients must pay all invoices on time, it isn’t happening in real life. In fact, only 51% of invoices paid by due date. If your business has high invoice count you must manage your time and prioritize clients you want to contact first. The best way to determine who is key is by payment expectancy assessment. How it’s done?

Invoice amount X chance of it payment by year-end. For example:
$100,000 X 75% = 75,000  <<< payment expectancy score

Invoices/clients with highest expectancy score are to worked first/ more often.

3. Calendar is your friend – time management is key at short time effort. To divide your time appropriately, you must understand first how many working days you have left before the deadline. Christmas eve is not a day you are going to work, and even if you do, will you have someone to contact for payment on your client’s side? If your clients are abroad, know their calendar as well.


4. Work on payment plans – you must pa paid in full on time. But, sometimes client can’t make it. Although frustrating, make the best in each situation. Can they pay you 50% now and 50% in January? If there is no other option, take it! Something is more than nothing. Keep that expectancy in mind.

5. Consider discounts (with caution) – If your cash flow demands it, you can offer an early payment discount, for invoices that are due in January. Long term it isn’t great as it hurts profitability and creates an expectation for the same in future. If there is no choice, 1-3% might offer might do the trick.
You will have to re-bill invoices and deal with clients paying you a late discounted amount. Consider if its worth the overhead.


6. Prepare for next year – make sure to improve in next year. Set the foundation for stress-free year-end. Implementing the right process supported by receivable collection management solution.

 

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