If you are like many other business owners then your accounts receivable system is outdated and only consists of invoice letters and an excel sheet. Getting your customers to purchase your product or service is only the first step to having a successful business. Having your clients pay what they owe and when they owe is probably the most important process your business has.
Streamlining your accounts receivable strategy should be on top of your things to do so you can enhance your cash-flow. Slow collections have a tendency to add up very quick and cost a ton of time and money. You need a professional billing system so your clients pay within deadlines so you can accurately forecast your financials.
Revamping your accounts receivable process is not as daunting as it might seem and will be well worth the effort. From integrating software to getting some outside help there are simple things you can do now to increase the efficiency of your accounts receivable process.
How To Streamline Your Accounts Receivable to Enhance Cash-Flow
- Invoicing Software. Get away from the excel sheets and invest in an invoicing program like FreshBooks or Outright. Another option would be to utilize the invoicing options contained in the accounting program QuickBooks. If you are not familiar with using this type of software there are many online tutorials to guide you through the process. Once you are up to speed using your new program then it is easy to see how many invoices have been sent, how many have been viewed, how many have been paid and how many remain outstanding.
- Enhance Billing Process. Even with your new software handling the data it is still a must you stay on top of your accounts and billing. Your terms of payment need to be clear with your clients and you need to ensure bills are sent precisely on time. Make sure you stay consistent with your payment schedule (within 30 days for example) for each of your clients to maintain a steady cash flow. Your billing process must also include a clear schedule and method for following up on overdue invoices. Example of this would be to call the day after a deadline, then email a week later then call again the following week.
- Help from the Outside. If the billing process and collecting money is taking up too much of your time that you should be spending doing the more important things then it is probably beneficial for you to enlist in some help. Outsourcing bookkeeping duties and other accounts receivable tasks can definitely help you streamline your billing processes. Your virtual accounts receivable agent will handle all of your billing and following up on invoices to track down your payments. This not only increases your cash flow by steadily eliminating outstanding payments but also allows you to focus on your core business processes.
Whether you are the one handling the accounts receivable or you have hired outside help it is important that every invoice is properly tracked and followed up on when not paid. You as a business owner or manager you need to also keep track of the regularly late paying clients and have a conversation with them as to what the reasons are for the late payments and how you can help them from being delinquent in the future.