Is improving accounts receivable on your list of New Year’s resolutions for your business? Are you looking for ways to connect with your clients or patients more effectively and reduce late payments or past-due accounts? As we transition into 2022 and the fiscal year comes to a close for many businesses, it’s a good idea to reflect on what is working — and what needs improving — for your accounts receivable and collections strategy in the new year.
End of Year Collections Can Be A Challenge
If you struggled with collections efforts and reducing past due accounts during the holiday season don’t fret. Managing a consistent A/R revenue cycle during the holidays can be particularly challenging when paired with the demands and added responsibilities we face at the end of the year.
Many companies experience a reduced staff presence towards the end of the year, as their team members take time off to visit with family and travel for the holidays. In addition, consumers will often accumulate more debt toward the end of the year and may put off paying past-due accounts in favor of putting their money towards the festivities in their life.
Resuming consistent collection efforts in the new year may seem intimidating, but taking a proactive approach in January can help you create an actionable approach and system that works in your favor year-round.
Review Your Outstanding Accounts
An important first step is reviewing all of your outstanding accounts and developing a plan to follow up with each client or patient as soon as possible. This is especially important if your collection efforts were put on the back burner at the end of the year — the longer a debt persists, the less likely it is to be settled and paid in full.
Meet Your Clients Where They Are At
Here at Kinum, Inc., helping our clients maintain good relationships with their customers and patients is our utmost priority. Receiving a call for collections can be a difficult moment for someone, and they may be filled with a lot of emotion, especially after the stress of the holidays.
Approaching your collection efforts positively and working with your clients or patients to find solutions that fit their situation is important, as it encourages them to pay on their past-due accounts while preserving your relationship.
Consider Payment Plans for Your Clients
An effective way of closing out past-due accounts is providing your clients with a variety of payment options, including payment plans, online payments, or other accommodations. For many clients, having the option to break down their debt into smaller amounts over a few months is more palatable than paying a lump sum, especially after holiday expenses.
Start Encouraging Upfront Payment in the New Year
An effective way to avoid late payments is to charge your patients or clients upfront. For some consumers, their accounts move into “past-due” not because they cannot afford to pay, but rather because too much time passes between receiving goods or services and receiving their first invoice. Charging your clients or patients upfront can help lessen or avoid late payments. If you cannot receive full payment at the beginning of a project or service, an alternative is to divide the cost in half — 50 percent is paid upfront, and the remaining half is paid when your work is complete.
Discuss Payment Terms & Costs Upfront
When it is not possible to charge your clients or patients at the onset of a process or service, establishing clear payment terms and costs upfront is crucial to avoiding past-due payments. This establishes transparency between you and your clients and ensures they understand what is expected of them when their invoice arrives later.
Set Yourself Up Well for 2022 with Kinum
Kinum, Inc. provides each client with an innovative, personalized approach to collection and debt recovery services. To learn more about how we can help you connect with and collect from your customers, please reach out to us today at (888) 471-0280.