Accounts Receivable: Making Things Easier for Small Businesses
Running a small business means requires you to wear many hats at the same time. If your accounts receivable hat is weighing you down, consider these tips to make your life easier.
Improve Your Internal Processes
Take a good hard look at your system for billing, invoicing and processing payments. Evaluate areas that slow down or overcomplicate the workflow. Look for unnecessary paper shuffling, incorrect data entry, inefficient filing and miscalculations. Spend some time refining and streamlining each process to facilitate faster payments.
Use Automation Services
The best way to streamline your internal accounts receivable process is by using third-party automation services like email invoicing, online bill pay and automatic payment deductions. Many customers prefer to have payments automatically withdrawn from their accounts because it saves them time and prevents them from making late payments. Customers also prefer receiving invoices and receipts through email and making one-time payments online. The easier you make it for your customers, the faster you get paid.
Crack Down on Late Payments
Customers do not want to make late payments because it hurts their credit and damages their relationship with you. However, sometimes they forget or do not have enough money, so they end up missing a due date. Regardless, take ownership over your invoices and send reminders as due dates approach. Each bill and reminder should clearly communicate the consequences of late payments and what customers should do if they are in danger of default.
Strictly follow your own protocol and avoid letting customers off the hook for paying late. Sometimes you face customers who are normally responsible but experience temporary financial hardship and proactively communicate their situation to you. You can certainly provide accommodations to maintain customer loyalty, but be cautious with generosity. You have your own bills to pay, and offering too many incentives does not communicate value or establish a strong sense of authority.
Get Help From the Pros
If accounting takes too much of your precious time, consider outsourcing the process to a third-party who manages invoicing, collections and late payments. This forfeits some of the control you have over your cash flow, but it can save you time and hassle in the long run. Just make sure you choose a reputable company that gives you transparent visibility into your finances.
Whether you decide to take on the work yourself or get outside help, the key is to streamline accounts receivable and automate as much as possible. Cut back on unnecessary workload and make it easy for your customers to pay on time.