How to deal with too many receivables

With every booming business comes a good number of receivables. These are perfectly normal for every business, but letting receivables cluster and never get paid is a huge problem, both immediate and for the future. The general rule for receivables is that they should be dealt with as soon as possible, but what can you do if clients aren’t making it easy?

Here are a few preventive and effective measures to help you deal with receivables:

Track your payments


Keeping track of all your payments is important because it will help you “chart” your receivables more easily. You can track all your accounting using something like Google Sheets, Microsoft Excel, or a specialized accounting tool like Quickbooks (which also allows for creating invoices).

The important part here is to track how long your receivables are up in the air. Having 15 to 30 day receivables is not a huge issue, but after 45 days the changes of ever getting paid start to reduce dramatically — so the ideal outcome is to never let it get that far.

Be clear from the beginning

A good preventive measure to make sure you get paid is to be very clear about payment methods, dates, and values from the beginning. This is why working with contracts is important (we’ll talk more about it below), but in short, use the early stages of negotiation to set up payments dates, making sure they are good for the client — if the terms are good for them, they are much more likely to pay on time and never let it go overdue.

Work with contracts

Contracts are supremely important in this business. Once you streamline the process of making them, they will become one of the most powerful tools at your disposal.

Use the contract to determine every service you will perform, but also how much it will cost and specific dates for the client to perform the payment. Having this agreed upon from the start will prevent any bad faith moves from the client’s side, as some people might try to wiggle out of paying by saying something is not according to how you agreed verbally, or claiming the conditions have changed. With a solid contract, you’re protected against this kind of move — at least, if the client does try to pull something like this, you can resort to a signed contract to prove your side.

Sent out invoices


Invoices are very easy to make nowadays with something like Quickbooks, and they can be sent in advance to your client as a reminder to make sure they are ready to pay on a determined date. It’s also a good way to keep track of your transactions, so one more reason to use them.

Consider hiring help

This is a more advanced idea, but if dealing with receivables is proving too hard or taking up too much of your time, consider hiring someone to deal with this part for you. You have a business to run and you might benefit from being able to roam freely to deal with clients and getting new jobs rather than dealing with accounting.

Naturally, this isn’t always viable, especially for those who are just starting. In that case, make use of the previous tips and do your best to prevent payments from ever turning into dreaded receivables in the first place.

When you have a number of receivables (and it will happen), then it’s a matter of respectfully insisting — after all, it’s your right to get paid!

You can even use the threat of legal measure to your advantage by sending a particularly overdue receivable a legal letter. Most people don’t want to take these things to court, not even business owners, but clients are especially afraid of it. In extreme cases, this can work in your favor.

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