Monitoring accounts receivable
1. Monitor your accounts receivable diligently
Whether the quantity of your overdue invoices just starts getting out of hand or is already out of reach, it is never too late to get a grip on what is going on with each invoice. Keeping regularly updated records of your accounts receivable is the very first step to gaining back control.
It is important to keep tabs on both of your unpaid and to-be-paid invoices. If there are any potential disputes with the latter, you still have ample time to resolve them and prevent those invoices from becoming outstanding. Even where there are no issues, having oversight of your accounts receivable ledgers means you are well prepared to act in case of late payment.
Uncertainties in textile trade often affect your customers' payment behaviour. However, a constant variable you need to take into account is business cultures. Some countries have comparable legislation and economies, but considerable differences in payment delays. There are fewer and shorter payment delays in countries where business cultures encourage prompt payment, and the opposite holds for countries where late payment is widely tolerated.
With many factors potentially impacting your customers' payment behaviour, there is no guarantee that all of your invoices will be paid on time. To make sure that you follow up swiftly on invoices just past due and increase your chance of collections, you can make use of methods like ageing analysis.
They help indicate which of your accounts receivable are due now and which are overdue. They also inform you of frequent late payers by showing the number of days your invoices have been outstanding. Such credit risks may be fed back to sales in case they continue to make deals with the same customers.