Your business offers a good or service that people need. They purchase your goods or hire you to perform services. When the transaction is complete, they pay you and you have money to reinvest in your business or pad your revenue goals. Easy, right?

While this is how business should work in theory, it’s very rare that the elements of a transaction take place in this immediate manner. More often than not, your company delivers a good or service, then bills the customer for compensation. The customer may pay within 24 hours or they may take their sweet time, resulting in cash flow problems for your company.

Keep reading to learn more about what causes overdue accounts and how factoring from The Commercial Finance Group may be able to help!

overduec1When Are Accounts Overdue?

When does an account go from “Oh I’m just waiting for them to pay, they’re good for it” to “This account is definitely overdue”? In the strictest sense of the word, financial arrangements become overdue on the next business day after the due date stated on the invoice.

This is why it’s so important to list a due date on your invoices, because it provides you with a baseline expectation upon which your collection efforts can be built. If your invoices are going out without due dates and a stated policy about what will happen when an account goes overdue, you’re making it harder to collect money that’s owed to your company.

Why Do Accounts Become Overdue?

There are several reasons why getting paid in a timely manner can be difficult for small to medium-sized businesses. The first reason, as mentioned above, is failure to set clear expectations for payment before the good or service is delivered. Additionally, misunderstood terms, disputes over the good or service that was delivered, forgetfulness on the part of the debtor, poor business management, cash flow problems, and blatant fraud are all reasons that accounts become overdue. So what can you, as a business owner who needs invoices to be paid, do to manage these overdue accounts?

overduec2Tips For Managing Overdue Accounts

The best way to manage overdue accounts is to prevent them from occurring in the first place! Try to anticipate and avoid the issues listed above through clear communication with your customers, salespeople, and collections departments. After prevention, the following tactics can help:

  • Sending regular reminders via phone and email
  • Implementing a late fee for overdue payment
  • Rewarding customers for paying early
  • Requiring payment upfront

Factoring Is A Way To Capitalize On Overdue Accounts

If you’re currently dealing with overdue accounts, you might feel as though the life is being squeezed out of your business, but don’t despair. The Commercial Financial Group in Atlanta specializes in factoring services that can help to transform those financial liabilities into opportunities for growth. Using our factoring services can allow you to unburden yourself with the never-ending task of following up with customers who don’t pay on time. Want to learn more about how factoring can help with unpaid accounts? Contact The Commercial Financial Group today.