How would you feel if you serve your customers in a timely manner and with complete dedication but ultimately linger around receiving the payments for a long time? In reality, this is quite a tough part to handle, as even your payments may be on hold for that time.
It is crucial to create a balance between accounts payables and accounts receivables for optimal cash flow within the system. If you are not receiving your payments on time, then your business can face issues due to lack of funds that can hamper your company’s growth. Therefore, it is essential to streamline your account receivable process.
Here are 6 smart steps to make the process of payments easier and more of genuine responsibility for your clients:
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Step 1: Take A Peek At Your Accounts Receivable Policy
As an accountant, you must be aware of the fact that all customers are not the same. Those of you who are working with large institutions would surely be aware that the accounts receivable process takes around 30-45 days for clients to issue payment.
Smaller companies, on the other hand, may adjust these payment terms with closer boundaries. It is thus better to frame an easily manageable and comfortable policy for both your business and clients.
Step 2: You Can Think Of Charging A Retainer Payment
With this payment scheme, the customer will have to pay half the cost upfront and the other half when you deliver the product or service.
You can also offer early payment discounts to encourage your clients to boost the account receivables. Clearly communicate your payment policy and terms to your customers beforehand. It would help to retain payments more easily and predict the cash flow better.
Step 3: Be In Touch With Your Customers
You should not at all hesitate to pick up the phone in order to contact your customers. When you make a simple and courteous call to remind them about their pending invoices, it will always be a positive response in terms of account receivables.
You can also remind your customers by sending them monthly statements. This will not only speed up your collection but will also be imprinted in the minds of your customers, and next time, they might not even wait for your call to make the payments in time.
Even if your clients are not able to make payments on time, don’t forget to stay professional. It helps to build an image of your business and avoids the possibility of harming your long-term relationships.
Step 4: You Need Not Struggle With Every Customer
You should not hesitate to turn away those customers for whom you don’t feel too positive in the first place. The reason is that you probably can figure out that the potential customer doesn’t have the funds to pay you.
If you are not comfortable working with that particular customer, then you should not waste your time and resources in serving them and also not get paid.
Instead, kindly refuse their work. If you really want to do their work, ensure to collect the payment pre-hand or on a pro-rata basis while marking the milestones.
Step 5: Double-check Your Invoices
It’s necessary for you to double-check the invoices which you send to your customers. By having a procedure set up, make sure that your invoices are looked into before they are sent to the customers. Everyone is busy these days, but you don’t want your customers to take out time to correct your billing mistakes.
It will only result in a delay in you getting paid and also in a bad business image. So, ensure your accountants make it right every time.
Step 6: Digitalize Your Payment Collection Process
One of the best practices to accelerate your payment collection methods is to offer multiple payment modes through digital payments to your clients. Accepting payments online can help streamline the account receivables and stay organized.
Opt for electronic billing and invoice process, as it can speed up the collection. Sending emails reduce the time wasted in sending and receiving paper receipts to your customers.
With the help of these simple 6 simple steps, you should be able to collect your past due invoices in a fast and trouble-free manner. Though all these operations are easily available to be tracked by CPAs and individual accountants through QuickBooks modules and tools for financial management, yet these steps are often skipped out leading to delay in payments.
With Hosted QuickBooks, it’s not that the accountants have to sit for long hours at office to do the same. The entire team can work in coordination in a hosted multi-user manner and can send invoices to customers and update them anytime and from anywhere.
Want to know more on how you can streamline your accounts receivable process? Contact our Solutions Consultant at 855-879-5481.