Turn Your Invoices Into Cash

turn-your-invoices-into-cashEver wish you could magically start getting your late paying customers paying on time? Or dream of getting checks by snapping your fingers from your delinquent accounts?

Unfortunately there is no magic elixir that can ensure turning your invoices into cash.  But, thorough and diligent account management does go a long way.  And it’s not as complicated as it may seem.

It’s really as simple as having a plan, being consistent and staying on top of your accounts.  Below are some of the ways in which your accounts receivable (AR) collection can be made more effective.

  1. Get Organized – Start by setting up a professional credit application that gives you a chance to get as much info as you can on your customers. If you decide to extend credit, be sure you have a contract that clearly states your terms.  It’s always a good idea to get a personal guarantee as well.  Also, be sure to invest in a solid invoicing software so that you are able to easily review your outstanding accounts and get your invoices to customers as effortlessly as possible.
  1. Evaluate Credit Terms Offered – While generous credit terms improve your customer’s cash flow position and may persuade them to do business with you, being too generous with credit terms can damage your own company’s cash flow so it’s important to strike the balance between meeting customer needs and creating a plan that’s workable for your business.
  1. Invoicing It Right – The best invoices include all relevant information, including payment terms, quantity sold or hours billed if you are a service organization. A clear invoice can help avoid the need for follow-up questions on items sold or services rendered, which can delay the payment process. Also, make sure invoices have accurate mailing address and contact information to avoid delays in delivering the invoice and getting payments. It is also important to send out bills as soon as products or services are delivered.
  1. CSV Letter – Implement sending out a “Customer Satisfaction Verification Letter” (a sample copy below) immediately following delivery of products and/or services along with an invoice specifying the due date which essentially closes all possible problems and excuses that could cause delayed or non-payments thereby making the collection process easier.


  1. Start Early & Track Payments Carefully – It’s important to set up a Cash Flow Recovery System and consistently utilize it and follow through. Should an invoice become past due, set the tone early in the relationship with the debtor by bringing the problem firmly, but professionally to their attention. It’s possible that the customer is testing you as a new vendor to see how sensitive you are to delays in payments so he can extend his cash flow to its maximum at your expense.  Send reminder emails and letters to the customer to help them pay on time and systematically as soon as they become late according to whatever recovery plan you have set up.
  1. Collection Calls – If your customers do not respond to courtesy emails and letters, you need to begin calling them to discuss the delinquent status of their account. It is important to be prepared, polite and non-threatening. However, you should increase the firmness of your tone and stress the seriousness of the situation as you make repeat calls.
  1. Charge Interest on Overdue Payments & Offer Rewards on Early Payments – Consequences for paying late or rewards for paying early just may help give customers an incentive getting that payment to you on time (or early). You can also use interest charged on a late payment as a motivation if you offer to “forgive the interest if you pay today”.
  1. Payment Plans – If you’ve tried all the strategies for getting payment in full and they have all bombed, one of your options is to offer payments. It’s a good idea to start your negotiation with two payments and slowly agree to more only when you must. When you make this offer, make it clear to your customer that you are bending the rules; this is a one-time offer and a precedent is NOT being set. Allow them to think you may even risk getting into trouble by offering this offer. At the very least you may generate some good will for being willing to break the rules for your customer.
  1. Collections and Further Actions – Working with a collections agency or a lawyer is usually the final step in collecting delinquent payments from a customer when everything else has failed, but it’s important to have a plan in place for your business when these situations occur and so that you can prepare for what to do when a problem arises. Your forethought and due-diligence with help resolve these issues more quickly and efficiently.
  1. Automate Payments – Making payment options easier is yet another way to make sure customers pay bills on time. Allowing the customer to use ACH or a saved credit card, will mean your bill gets paid and the customer doesn’t actually have to do anything past setup of the payments.

Please visit Dynamic Legal Recovery’s website or call us at 877-777-7564 for your complimentary evaluation.

Posted in Resources, Uncategorized Tagged with: , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *


one × one =