AW Holding
Not meeting your sales targets or adhering to clients’ requests are the only ways to lose money, you would do anything right by the book but still losing money and that’s due to the delinquent account receivable.
The collection of your money from your clients is the crux of the matter, and through this blog we will tell you the causes of this matter, how it affects your business and most importantly how to handle delinquent account receivable.
How delinquent accounts affect your account receivable?
At first let’s see how the delay of payment for these accounts affects your business:
1 – Cash Flow Disruption:
Running your operations needs liquidity, starting production cycle and completing previous ones needs liquidity, paying rents, utilities, salaries and insurance needs liquidity as well, you can’t adhere to this without having enough cash pumping into your bank accounts to meet these obligations and keep your business running, you may extend credit and hold salaries for some time and skip some months without paying your office or factory utilities but at some point you won’t be able to keep on and may lead you to bankruptcy at the end.
2 – Losing Investment Opportunities:
Not having enough cash at the right moment can cost you a lot, missing opportunities could be turning point to your business from partnerships, collaborations, sponsorships, expansions or new launches, liquidity is the key for new investment projects and new wins for your business.
3 – Increasing Bad Debt Rates:
Delinquent account receivable turns to bad debts with time, if no actions done from your side or minimum collection occurred for these accounts all the values will move to bad debt section in your balance sheet and this means loses because you lost hope or retrieving those amounts of money for your sold goods or services, simply it’s like giving your product for free, you may do this in some kind of promotional plans to increase sales but with limited time frame and amount but with the huge amount of bad debts your business could close its doors.
4 – Weaken Business Relations:
No body in your firm likes to handle the collection task as it affects the client relationship especially if you are in the front line with the clients or your role are based on nurturing the customer relations and growing the accounts portfolio and with the noises of claims and recovery, account management can be affected.
4 Reasons for delinquent account receivable:
1 – Invoice Disputes:
Invoice disagreements can lead to permanent unpayment, you need to be transparent with your clients, address any invoice related issues effectively and positively to correct the status of these accounts, you have to be open to customer disputes as invoice errors can be coming from your side due to human mistake or errors from your billing system or some additional cost that weren’t communicated from the first place, so leaving these accounts without assertive solution won’t lead to payment anytime soon.
2 – Economic Crisis:
Economic world after covid is not the same anymore, taking into consideration economic crisis is not a luxury or an add-on in your business plans especially if you are dealing with sensitive sectors like tourism and hospitality, you will need assess the geographical and political risks affects those kind of industries and what would be your reconsolidation plan for your delinquent account receivable.
3 – Miscommunication:
I just forget, that’s it, sometimes your clients forgot to pay their bills, they have no intention for not paying or disputing, they just missed the date because you didn’t remind them or you don’t have a system for reminding, I can assure to you that no is paying attention to his telephone or internet bill until he receive a message that you need to recharge.
4 – Financial Distress:
Stumbles, regular events strike away companies due to several reasons, you could be one of them unless organizing your budget very well and managing your delinquent account receivable is a part of it and that’s what we are going to talk about next.
How to manage delinquent account receivable?
1 – Create a Communication and reminding Strategy:
To overcome miscommunication issues and invoices disputes you need to make a strategy for communicating your clients and reminding them for invoices dates by emails, phone calls and even field visits if it requires, it depends on segmenting your customers based on many sections like amount of their account receivable, date of payment, history of transactions and so on, it will also help you to raise early flags for any invoice errors discovered to solve it promptly.
2 – Diverse your Payment Methods and Options:
Showing flexibility in your payment methods is a fixed thing nowadays, it’s not your customer fault anymore that you do not enable online payment, or you only receive cash, or you don’t accept cheques, for your own sake avail any possible payment option to facilitate and decrease your delinquent account receivable.
3 – Involve a Collection Agency:
This option is recommended if you are concerned about your client relations, or your staff doesn’t have the capacity to collect or if they can’t do this task professionally you can outsource a collection agency to create a collection system for your corporate from scratch starting from the reminding frequency and systems to the templates, invoicing and collecting just like AW Qatar.
How can AW Qatar help with your delinquent account receivable?
AW Qatar a pioneering in accounts receivable management and collection, with 27 years of experience in this field saving a lot of business profiles from bankruptcy and solving cash flow issues causing from not collecting their receivables on time.
AW Qatar can provide you with the manpower and tools needed to manage your delinquent account receivable portfolio starting from delivering invoices to your buyers, auditing and solving disputes, acting as in your house team and provide support to your clients to keep business relations and most importantly following up on payments and collecting them to be handed to you directly in your favorite channel whether in banks or your corporate safes.
Eliminate your accounts receivable now and adjust their cells in your accounting records to profit by contacting us right away to have a tailored solution fits your booking system and industry.