There are a lot of warning signs or red flags that your clients may be paying you late. However, warning signs could be readily disregarded. On the other side, green flags provide a sense of security and reliability. The more green flags you see, the more confident you can be that your company is dealing with the appropriate clients—clients who value your collaboration and respect your time—and that you are handling accounts receivable correctly.

Let’s take a closer look at five signs that your client will make their payments on time.

1. Appropriate Move from Sales

The transfer of responsibility to accounts receivable is crucial if the sales department closed the contract. This indicates that prior to gaining the client’s business, account receivables and the credit department were involved in assessing the client’s credit application and/or their payment history. At the very least, sales and accounts receivable are working together to make sure the client is aware of what they owe and when, even if the credit department isn’t involved.

2. Regular Communication

You can gasp with relief if your client contact or accounts payable department is easily reachable by phone or email. Consistent communication is an excellent indicator that you can get in touch with someone if you have any queries, issues, or need to check up on an invoice. It also implies that your client is most likely trustworthy and will honour their commitment to make payments on schedule.

3. Proper Invoicing

Clients will usually pay on time if they know about description of goods or services provided, how much to pay, when to pay, who to pay and how to pay. If you include all of this information on your invoices along with any other necessary information (contract details, account number, etc.), your client won’t have many reasons not to pay you on time.

4. Accounting History

Although this appears obvious, it shouldn’t be disregarded. When a client has a solid payment history with you or another party, they are more likely to make payments on schedule to your company. It’s a given that customers will continue to support your business if they have been paying you on time. Otherwise, a company credit check could show that they have a history of making their payments on time for other accounts they owe, giving you peace of mind.

5. Simple Ways to Pay

Your client is more likely to pay on time if you offer simple payment options like direct deposit, ACH, or credit card. Even better is when the accounts payable division informs you or your accounts receivable division that payment has been completed and when you might anticipate it showing up in your bank account. They trust you and want to continue paying you if they’re prepared to set up these simple payment choices for your company.

Final Thoughts

Green flags do not guarantee that your client will never make a late payment. They are therefore less prone to make a late payment. Your accounts receivable department can set up several of these items to safeguard your interests. In other words, your cash flow will appreciate you for the work you put into properly invoicing and communicating.

If you value the overall health of your company, you must take debtor management seriously and consistently. On contracts, quotes, and invoices, include a clear statement of your payment terms. Don’t continue to supply someone who doesn’t intend to pay, and don’t give credit to anyone.

Last but not least, remain prominent in the customer’s mind so that when they plan payments, they think of you first. You’ll be well on your way to successful debtor management and business operations if you observe the above mentioned green flags in your client.