With the holidays quickly approaching, it can be easy to fall under the notion that your customer payments will arrive as usual. In reality, some businesses will shut down for weeks during the holiday season, narrowing the window for paying invoices. Instead of watching your working capital fall short, you can prepare in advance.
Here are 5 steps to take to avoid late payments during the holidays. ✨
Step 1
Ask About Holiday Scheduling Now
One of the best practices we recommend for accounts receivable is to communicate regularly with your client's accounts payable department. If it's possible to develop a professional relationship with the person who receives the invoices or cuts the checks, that's even better. Reach out to your contact and ask if they have scheduled company-wide holiday breaks. Ask directly if they prefer that you send invoices during certain times to match up with their payment schedule for the rest of the year.
Step 2
Move to Online Payments
If you're concerned about waiting for checks to arrive with the onslaught of holiday cards and gifts, this may be the perfect time to move to online payments. With the announcement that the United States Postal Service is expected to be slower, it makes sense to deliver invoices electronically and get paid that way too.
Step 3
Think About Taxes
Some businesses hold off on accounting for late December payments until January in order to reduce their taxable income. Some businesses also hold off on paying December invoices until then too. Do some research or ask if your client has a tax plan that could affect your payment expectations. It's also a good time to clean up your accounts receivable for the year or decide if you're planning to write off bad debt at the end of the year.
Step 4
Look at Last Year's Books
If you're wondering which accounts to be concerned about, review your client payments from the previous year or the previous few years. Are there clients who have consistently paid late during the holidays? Focus on those and ask specifically what you can do to reduce the likelihood of late payments this holiday season.
Step 5
Make a Back-Up Plan
If you still expect that your client payments will decrease during the holidays, it's time for a backup plan. Here are some options:
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Decrease spending over the next few months
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Take on a small business loan
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Outsource your accounts receivable collections
Enterprise Recovery offers a "white label" accounts receivable service to help boost your cash flow when you need it most. Best of all, if our accounts receivable services are unable to resolve your accounts, we'll switch to our debt collections workflow. We're happy to answer any questions and help get your business through the holiday season.
