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What can I do to help reduce my business receivables?

On Behalf of | Nov 11, 2022 | Business Consulting & Advice |

Your company took on a major project that promised significant profit. You finished the project on time or possibly even ahead of schedule. You kept costs low and communicated with your client regularly about the status of your work. 

However, despite fulfilling all of the work required in your contract, the other party hasn’t paid. You have sent collection notices and possibly even initiated a civil lawsuit against them. This struggle to secure payment can be an opportunity for your business to avoid such hardship again later. 

There are things your company can do to bring your accounts receivable into good standing, but you also need to think about reducing receivable invoices in the future. How can you potentially rework your business to avoid collection issues in the future? 

Review and update your contracts

The first and simplest way for a business to protect against a client not paying in the future is to create more effective contracts. Imposing late fees and other financial penalties in the contract can let prospective clients know your company means business when it comes to receiving payment in full. 

Revamp your payment model

You only need to have one client force you through an aggressive collections process to realize that allowing clients to pay after project completion is not the best approach. You may want to start requiring a deposit, increasing the size of the deposit you require and increasing the frequency of periodic payments. 

There could be many other ways for your company to reduce the number of receivable accounts it has open depending on the business model you currently employ. Discussing your recent business collections challenges with an experienced business law attorney can help your organization avoid similar issues in the future. Give a call to schedule a consultation.