Whatever your business, getting paid by clients in a timely manner is key to keeping the cash flowing. But ensuring you're paid on time is not always as easy as it sounds. So how can you manage and improve your accounts receivable? Here are 6 tips to get the greenbacks moving.
Cut your wait time between several days and a week by simply getting email addresses from customers and invoicing them electronically. In addition to this method being faster then old-fashioned mail service, it's also often integrated into accounting software and makes it easier to verify that customers have received your billings.
Send Automated Reminders
Another feature of many accounting software packages is the ability to generate and email (or print) payment reminders for customers. This is a simple (and quick) method of gently prodding clients to pay and helps you save time calling people.
Offer Payment Options
Want to make it more likely they'll pay on time? Offer your clients different, easier ways to pay. Modern options range from credit cards and online payment services to electronic funds transfers and mobile payment apps. The more ways you have to let customers pay on the road and digitally, the more likely you'll be to find a method they really like...and the less likely you'll have to wait for a check to be cut.
Maintain Good Relationships
It's human nature to want to please people you like and enjoy working with. Use this to your advantage by keeping up good lines of communication and a healthy business relationship with your customers. They'll be more likely to want to pay you first if they can't pay all their vendors, and it'll be easier to pick up the phone if you need to remind them of payment
Discounts for early payment give your customer a concrete reason to move your invoice up in the payment schedule. Many businesses offer between 1/2 percent and 2 percent off the invoice total if it's paid in a short time (usually 10 or 15 days). You may risk losing a small amount of money, but the improvement in your cash flow will likely make up for it.
If you struggle with any part of the accounts receivable process--such as finding the time to create or follow up on invoices or calling people to ask for payment--don't hesitate to outsource the work to a bookkeeping service like Watson & Company Inc. Leaving it to professionals will almost certainly lower your stress level and result in better cash flow.
Analyzing your accounts receivable trends with your accountant or bookkeeper will help you identify which of these tips can help you improve cash flow. And then, you can get back to the business of running your business.