20 May How to Control Your Accounts Receivable
Staying on top of your finances is a must if you want to gain the upper hand in your business. Meeting financial obligations is important or else, you might lose sight of your cash flow. Managing accounts receivable is one tedious process, but it is crucial to your profit stream. Sending out invoices to your client is a battle half won – it does not instantly equate to a sale or a closed deal. The moment funds are cleared and received is when you actually get into a successful close.
Controlling your accounts receivable need not be a frustrating ordeal with these simple ways in check:
Be clear about the billing process
The most common reason why most sales go down the drain is miscommunication between two parties. In the proposal phase of your meeting, you must make your billing policies and procedures clear. Expectations must be communicated so that everything will be streamlined. Your client would not have known that they would need to pay on a specific date if they weren’t informed beforehand. Billing in advance is also a good option because this will provide you a steady and healthy cash flow while the clients would also have less to pay before the deadline for payment.
Record your sales
Keeping a record of your sales transactions is important. It is the basis of every transaction now and in the future, so this is a must for all businesses. Using an accounting software such as QuickBooks will help make the recording, updating, and invoicing easy. You can also do manual entries, but this would take up much time and would also require extra accuracy and precision in your entries.
Send out statements right away. You should send out statements ASAP especially for overdue accounts. Controlling the account receivable balance is easier if you send out statements the day after the due date. So, for instance, the client’s due date is on the 15th, then you must issue a statement on the 16th. Some clients actually forget that they have an invoice to pay especially if they have a lot on their plate. So, a reminder of payment would really be a huge help for both sides of the fence.
Do a weekly assessment of your accounts receivable
You should get into a habit of reviewing your records of accounts receivables weekly to make sure that you have not missed a detail or a sore spot. With this, you would also get a feel or foresight of some trends in your records such as people who tend to pay late and would watch out for these clients and send them reminders as much as necessary. This would also help you get a better grip on your accounts receivable and improve your cash flow management.
You need not deal with the stress and litter of having to deal with late payments all the time
Some clients do need to be fired especially if they have been delinquent for a long time. Staying on top of your business needs the right mix of agility and assertiveness – you have to ensure that payments are right on the dot and remind people to pay on time. You can also send early reminders out especially for people who have been habitually late with payments. Managing your accounts receivable is easy with open communication and some accounting tools and technology to help you get on top of things.