If you run a cannabis or CBD company of any size, the last thing you want is to have past-due account receivables. But, this is the real world. Customers are bound to fail to keep their end of the bargain forcing you to go hard after your hard-earned bucks.
Typically, the issues of account receivables occur because the customer is contentious, disorganized, or broke. Either way, your business will likely hit a wall or drag on if your cash flow is not right. You have to generate sales, hire quality employees, and run smooth cannabis operations. So how can you fast-track the process of collecting cannabis and CBD account receivables?
- Utilize Technology
If you do not have a quality Accounts Receivable (AR) software, it might be time to get one. Your competitors are probably using one or several already – do not be left behind. If you do have one, make sure it is updated round the clock. Good software should help track account receivables by giving you updated information of the invoices sent, those that have been viewed and paid, and those that are yet to be paid. This makes the collection process a whole lot quicker.
- Act Fast
Most cannabis companies wait too long before taking action on unpaid account receivables. However, the longer a receivable goes uncollected, the higher the chances of it being written off—either partially or fully. So, when the due time approaches, send out polite reminders. If nothing happens on the due date, follow the right steps of collecting the past-due receivables as soon as you can. Resist the temptation to procrastinate the collection process.
- Create An Aging Report
An aging report places customers under varying categories. For instance, they can be placed into time periods (under 30 days, 30-60 days, and over 60 days). Having a clear, tabulated report of this nature helps you know who is late, how many days they are late, and the amount owed. This way, you can move into action as soon as you can.
- Offer Discounts On Early Payments
You can also fast-track your collection process by giving your customers an incentive on early payment. For example, you can offer your customers a 3% discount for payment within the first 10 days. This will encourage them to honor their dues and help you maintain healthy cash flow. Beware though that this might have some cost implications on your business. Work your books before giving such discounts.
- Have A Collection Plan in Place
Last but not least, it is important to create a plan for making collections on cannabis accounts receivables. List down all the steps to be taken for the process and assign specific people to handle it. For example, ask two of your customer care reps to make calls to clients prior to the due date to ensure there are zero disputes on invoices sent. They can also ask the customer when they intend to clear the invoice. If the customer does not pay up on their due date, the person responsible for the collection should be aware of their duties.
As your cannabis and CBD Company grows, it is relatively easy for your sales to get caught in the account receivables web. The amount may seem insignificant at first but it might accumulate over time and cause cash flow issues. There is a need to have the right processes and guidelines in place long before the collection process begins.