16 Apr Tips for Timely Collection from Customers
Managing cash flow is one of the most challenging aspects of running a growing business. Ever wish you could just wave a wand and start getting your late paying customers paying on time?
Sadly there is no discovered magic that can help make sure your invoices turn into cash, but diligent accounts receivable management can surely do the trick. Believe it or not, accounts receivable management is not as complicated as it seems. It’s about being specific, consistent and staying on top of those accounts. The more systematic you make it for your customers, will result in better cash flow for you and your business.
Here are some helpful tips by our in-house bookkeeper Stephanie King. These simple tips can shorten your collection cycle and improve your company’s cash flow.
- Ensure your payment terms are obvious and clear on all invoices. If customers can’t find your payment terms they will make up their own.
- Setting your payment terms as ‘Strictly 7 days’ will hold you in better stead to receive payment within the month. Some clients always pay suppliers on time but some don’t. At least if your account is 7 days, most will pay under 30 days. If your invoice has a 30 day term, you will most likely go to the bottom of the priority pile.
- Set a date of the month to email all customers statements. Even if the account is not overdue, this will act as a gentle reminder and usually triggers payment. This can be done using your accounting program in under 5 minutes if payments are reconciled.
- Keep the date you email statements consistent. If statements are always sent at the start of the month, they are most likely to be accepted as a reminder that is part of your internal process. Just sending statements when you want payment, are more likely to be taken as a ‘hurry up and pay’.
- Email invoices rather than mail them. This saves in postage but also gets your invoice to them immediately. Cloud accounting programs such as Xero, MYOB and Quickbooks also have the functionality where it will tell you if the invoice has been received, eliminating the excuse ‘I didn’t receive the invoice’ as a delay tactic.
- Ensure your payment options are clear and that your BSB and account number are obvious. I often see invoices where they have forgotten to write their bank details so I can’t pay even if I wanted to.
If you or your business are having difficulty juggling your cash flow and invoicing contact one of our friendly staff members to see what solutions we can offer you.