Dean Kaplan, president of The Kaplan Group, offers valuable insights on business debt collection, contract negotiations, and financial advice. In his latest article, Kaplan highlights seven common mistakes that businesses make that lead to late payments from clients, ultimately hindering cash flow and profitability. The first mistake he identifies is neglecting credit checks, emphasizing the importance of assessing a client’s credit history before extending credit terms.
Another critical mistake Kaplan discusses is the absence of a written business agreement. By not clearly defining payment terms and procedures in a legal document, businesses risk facing challenges in enforcing timely payments from clients. Having a written agreement not only conveys expectations but also helps build trust between both parties by outlining responsibilities and potential consequences for late payments.
Kaplan also points out the importance of identifying who approves invoices within a client’s organization. Knowing the decision-makers and their contact information can expedite the payment process and prevent delays in resolving payment issues. Additionally, businesses should ensure that their billing statements are accurate and clear, addressing any potential discrepancies or questions that clients may have about the invoiced amount or services rendered.
Offering multiple payment options to clients is another best practice that can improve cash flow and enhance customer satisfaction. By accommodating different payment methods such as e-checks, credit cards, and online platforms, businesses can streamline the payment process and increase the likelihood of timely payments. Moreover, incentivizing early payments with discounts or rewards can motivate clients to settle their balances promptly, fostering a positive payment culture.
Lastly, Kaplan emphasizes the importance of taking prompt action on overdue accounts. By reaching out to clients as soon as an account falls behind, sending reminders, and investigating the reason for non-payment, businesses can proactively address payment issues and work towards finding a solution. Setting up a procedure for referring delinquent accounts to collections can also increase the chances of recovering outstanding amounts and mitigate financial losses for the business.
In conclusion, Dean Kaplan’s expert advice on avoiding common billing mistakes and implementing best practices for debt collection is essential for businesses looking to optimize their cash flow and maintain long-term profitability. By incorporating these strategies into their operations, businesses can improve financial efficiency, build stronger relationships with clients, and safeguard against the risks of late payments and outstanding debts.
