How can businesses improve their accounts receivable collections?

Establishing clear payment terms and diligently following up on overdue accounts is a vital strategy for improving accounts receivable collections. When businesses define their payment terms upfront—such as specifying due dates, acceptable payment methods, and any penalties for late payments—they set clear expectations for customers. This clarity helps prevent misunderstandings that could lead to delayed payments.

Additionally, actively following up on overdue accounts is essential. By reaching out to customers when payments are overdue, businesses can remind them of their obligations and potentially resolve issues that may be causing the delay in payment. This proactive communication not only helps in collecting owed amounts but also strengthens relationships with customers by demonstrating the business’s commitment to maintaining open lines of dialogue.

In contrast, the other choices do not directly address the issue of improving collections. Increasing product prices could create dissatisfaction and deter customers, while reducing service offerings might negatively impact the value perceived by customers, leading to fewer sales. Minimizing customer interactions can result in a lack of engagement that could further delay payments, as customers might feel less inclined to address payment issues if not prompted. Thus, option B stands out as the most effective strategy for enhancing accounts receivable collections.