An invoice should include the date it was prepared, the customer's name and address, a description of the goods or services delivered to the customer, the amount due, and when payment is expected. Invoices without payment terms may automatically fall to the bottom of customers' payment piles. Offer discounts for prompt payment. Some customers will pay sooner if you give them an incentive to do so. Trade discounts typically give customers 1 percent or 2 percent off the total amount due if payment in made in 10 days.
Many businesses deal with each collection problem on a case by case basis.
You can benefit from establishing written credit and collection policies in advance. These policies represent a systems approach to help you and your employees determine who should get how much credit and what will happen at various stages in the collection cycle. Using a systematic approach will improve your cash flow. A credit and collection policy may include some of the ideas that follow below. Aggressively follow up on past-due accounts.