Most businesses are not able to get payment for their services in due time. It can be time consuming and difficult to improve your collection process – read further to understand on how you can find the solution for this problem.

How Quickly customers pay you indicates the length of your accounts receivables cycle also know as Accounts Receivable (AR) Turnover Ratio, which begins when a customer buys your product and ends when they eventually pay you. The collection procedure includes everything that takes place in between.

One way to maintain your business is by maintaining accounts receivable turnover ratio. The accounts receivable turnover ratio of a business organization can be maintained by improving the overall collection process.

What is Cash Flow?

Cash Flow is the amount of money that moves from and to your businesses every month. Any business organization should be aware of its cash flow. Cash Flow statements are very crucial as they detail the financial transactions such as operating activities, and investing activities. These details are important because one must at all times know the cash flow inside and outside of the business organization. For a business to remain sustainable and avoid bankruptcy, having cash on hand is a fundamental requirement.

What are the reasons for the late payments to businesses?

• Industry– Regardless of transaction values, the collection value depends on the industry type. For example, financial services firms collect their payments fastest.
• Type of Client– The reason for the variation in collection time does not only depend on the industry offering services but also on the customer availing of the services. These customers come from different sectors and are not always able to complete financial transactions on time.
• Mode of Payment– There are primarily two methods of payment, which are push-based and pull-based methods. A push payment is the type of payment where the customer initiates the transfer of funds to the recipient. As a result, the payer determines the payment’s total and final destination. A pull payment (commonly known as auto pay), on the other hand, is a payment mechanism where the payee gives the payer instructions (ex credit card information or bank information (ACH)) to pull the funds on due date. Hence, one of the reasons for the late payments to businesses might be the payment methods, or essentially who controls the funds.

Strategies To Recover Payments Faster

Any business organization expects a timely payment from their customers, be it a large or small business, whilst delivering their products or services. However, customers tend to push the transactions of payments. There is a solution to it. Agencies nowadays are employing certain methods for faster payment. Some of them are as follows,

• Right Payment Solution– As the speed of the transaction depends on the payment method, agencies find it wise to employ the right payment solution and launch structured strategies for that.
• Organization– The organization of teams, and the coordination between different departments would allow the speeding of the whole process right from the start to the end of a transaction.
• End-to-End Visibility– With a complete overview of all of your invoices and the status of their payments in one location, an agency can take quick action to resolve supplier inquiries and enhance your cash management and cash forecasting.

Contact us today for more on how we can help you collect payments faster & manage your cashflow.