Odessa Office: (877) 785-1826 Andrews Office: (432) 523-7878
How To Collect Past Due Invoices?
A past due invoice is when a client/clients don’t pay the amount you billed for a service or product you provided in the past. These amounts add up to create a business’ accounts receivable- the revenue expected but yet to be collected. In this article, we want to discuss:
- Why a large amount of past due invoices can be damaging to your business and a hindrance to your business’ success.
- Common Reasons past due Invoices Collect
- Ways to Be Proactive about past due Invoices
- How to Use Technology to Collect Past Due Invoices
Most businesses use accrual accounting due to needing to stay compliant or simply the size of their business. This means that they are reporting (or recognizing) revenues and expenses as a transaction occurs, not when payment is received. For example, a business completes a service or sells a product to a client and bills them, giving them 15 days to pay. However, immediately this sale is reported in their books as revenue even though technically they don’t have the money. This is when accounts receivable build. If this happens often, or if clients are not paying on time…we start to have a large amount of past due invoices and therefore a large amount of accounts receivable.
How Past Due Invoices affect your Business Success
Having a balance in your accounts receivable is normal, especially since most businesses use an accrual basis for accounting. But a growing accounts receivable can be detrimental to your business’ success. This is for several reasons, but here are the top three:
Third, when making financial decisions, it is important to both have and understand an accurate cash flow. When you have good systems in place to keep your accounts receivable low, this is possible. However, when businesses fall behind in collecting unpaid invoices- it becomes difficult to know how much money a business really has and make any predictions to inform decision making.
First and foremost, your company did hard work to perform a service or create and sell a product to a client. If there is a big gap between the amount you expect in payment and the amount you’re actually getting, you’re losing money that could be used to reinvest in your business.
Secondly, if your company needs a loan- some banks will be looking at profit/sale history and question high amounts of accounts receivable. We don’t want you to be denied money you need because of a pile of overdue unpaid invoices.
Third, when making financial decisions, it is important to both have and understand an accurate cash flow. When you have good systems in place to keep your accounts receivable low, this is possible. However, when businesses fall behind in collecting past due invoices- it becomes difficult to know how much money a business really has and make any predictions to inform decision making.
Introducing CollectPRO
CollectPro is the newest innovation designed to revolutionize how you manage and streamline your collections process. Our mission is to bring you a state-of-the-art solution that seamlessly integrates with your existing systems, powered by the robust capabilities of Quattro Software, which is brother company of Group 1826.
Enhanced Efficiency: Automate tedious tasks and cut down on manual errors. CollectPro.app optimizes every step of your collections workflow.
Real-Time Analytics: Gain actionable insights with real-time data and advanced reporting features, all integrated with Quattro Software’s powerful analytics tools.
Seamless Integration: Our app is designed to work flawlessly with Quattro Software, ensuring a smooth transition and enhanced functionality.
User-Friendly Interface: Enjoy an intuitive design that’s easy to navigate, making complex processes straightforward and accessible for all users.
How to get started?
Ready to experience the future of collections management? Visit CollectPro.app to learn more about how our app can transform your processes. Try out the demo, explore our features, and see firsthand how CollectPRO can benefit your organization
