Managing your accounts receivables ensures a smooth flow in your business operations. Late payments, misplaced invoices, and unsettled debts can negatively impact cash flow and impede your company’s growth. Additionally, inefficient processes can also decrease productivity.
Some business owners might find it intimidating to handle their accounts receivables. However, with the right systems and processes in place, you can streamline tasks and free up valuable time. To know how you can better manage your accounts receivables, here are five ways to help you out.
Create a System for Handling Accounts Receivable
Being organized is a key component to efficient accounts receivable management. Through written guidelines, entrepreneurs can follow a consistent method when handling invoicing, payments, credit processing, and customer data. These listed procedures can improve productivity, minimize errors, and ensure that business operations run smoothly.
Automate Your Accounts Receivable Management Processes
Although some businesses email their invoices to clients, manually creating the invoice file is often too tedious and might be susceptible to mistakes. Many companies are already using an online invoice maker to automate customer invoicing and payments processes.
An invoice maker app enables secure online payments, providing a hassle-free experience to clients. They often also come with features like automated recurring invoices, which send out invoices on a regular schedule, eliminating the need to complete repetitive tasks so that you can focus on other more important business operations.
Closely Monitor and Review Your Financial Records
Staying on top of your finances is essential to maintaining a healthy cash flow. Furthermore, keeping track of your accounts receivable also aids in timely follow-up with clients and necessary intervention.
It is advisable to review your customer invoice aging on a daily basis. With a periodic assessment of your financial records, you can reduce outstanding accounts receivable balances and determine any problem accounts.
Ensure that Payment Policies are Clear
Among the causes of disorderly receivables are unclear billing policies. Business owners must ensure to communicate their terms effectively to customers for compliance. The same also goes for your credit policies.
The main payment terms discussed with your clients should include the billing due date and the available payment options. Ideally, you should offer multiple payment methods to your customers, providing them convenience with the process. It also encourages them to settle their remittances on time.
Moreover, additional fees should also be explicitly expressed, such as late fees if the client fails to complete the payment within the agreed timeline. It is recommended as well to require a deposit from new customers prior to delivering their purchase.
Be Proactive When It Comes to Invoicing and Payments Collection
As a business owner, you should be firm in implementing your policies. All parties should follow through with the agreed payment deadlines, amount to be settled, and payment options.
Sending your invoice sooner rather than later contributes to collecting remittances faster, which is why many prefer using invoicing software to perform the process.
You can also incentivize your customers to encourage them to pay on time or even earlier than the payment deadline. In addition, payment reminders should be sent for near due or overdue bills to indicate urgency on the matter.
Streamline Your Accounts Receivables Management with KIPPIN
KIPPIN – from the phrase “Keeping it simple” – aims to make people’s lives easier by providing simple solutions to everyday tasks. We provide accounting, bookkeeping, invoicing, payroll, and tax services – all on the cloud. We also align our clients to top financial experts on our platform to handle your financial management needs.