It’s hard to handle your cash flow if you don’t have a good grip on your accounts receivable. A slow payment system or collecting on overdue accounts can cause business nightmares. Your invoice system needs to create a smooth cash flow in order for you to avoid the bumps in the road that turn into money pits. If you are ready to kick your accounts receivable system up a notch, try some of these tips to bring it up to speed.
The steadiness of your cash flow can get clogged in many different places during the process. Having visibility of the customer-to-cash cycle can show you where the problems lie. A good document handling system, which allows you to access your accounts at every stage, speeds up the process and saves time and money. Organization of all your accounts along the path also can prevent confusion, errors, and lost money.
Upgrading to invoice software can help you create, send and track your invoices. Optimizing your invoice also decreases the amount of time it takes to collect payments. Intuit invoicing is a good place to look for what invoice software can do to help your business. Use applications that can handle not only your invoice, but also payroll, taxes, banking, and other financial accounts. This is the ideal way to coordinate all your finances.
The invoice you send your customers should clearly communicate how you will accept payment from them. If you deal with larger businesses as customers, the invoice may have to go through an approval process to get paid. That needs to be clear to everyone who sees it. Your invoice should have a professional look, with your logo at the top, clearly stated payment terms, and the specifics of items or services they are being billed for. Be sure to include what payment forms you accept, who to make checks out to, and where to mail payments.
Controlling Your Credit
Extending credit to good customers is an excellent way to increase business. However, it can be a double-edged sword. You control the credit you extend, how much, and to whom. Get to know your customers and their paying habits before offering them a credit option to avoid problems, as Funding Gate suggests. Make more credit available as good customers make payments. Extending too much credit to start with can hurt your cash flow.
Coping With Collections
One of the most difficult tasks small businesses handle is collecting from slow, late or non-payment for invoices. Of course, collecting money is how you stay in business. When creating your invoice, be sure to clearly state payment terms, such as “payment due within 30 days”. Then make it a priority to track your invoices with an account aging report. Follow up with unpaid invoices as soon as they are overdue. The longer an invoice is outstanding, the harder it becomes to collect it.