We are living in unprecedented times that will surely be mentioned in history books. Not only for the global pandemic but the economic impact that comes with it.
Many businesses are struggling financially which is why it is more important than ever to increase cash flow. While this may seem difficult, right now is actually a great opportunity to improve your business, starting with your accounts receivable.
With the following proven practices, you will be able to efficiently manage your accounts receivable from the comfort of your home.
1. Move to Electronic Invoicing
This may sound simple and perhaps common sense in today’s modern age, but did you know that 90% of businesses still process invoices manually? Manual invoicing is the traditional method but with it comes the risk of human error, such as duplicate entries, which negatively affects the rest of your accounting. It also is time consuming and labor intensive, taking an average of six days just to create the initial invoice.
Using cloud-based invoicing software is a faster and more efficient method than manual invoicing, invoices can be created and sent – instantly. With technology more ingrained into our society than ever, it is important for customers to be able to access invoices anywhere, at any time.
Automated invoicing removes the need for bulky documents, is environmentally friendly, and saves money on postage
2. Provide Easy Online Payment Options
Have you ever tried to pay for a product or service only to find out last minute that the business only accepts cash? Remember how uncomfortable that was? By not providing several payment options you are not only limiting your ability to get paid but you’re also negatively affecting the customer’s experience.
You can also consider allowing particular customers to make special arrangements, such as payment plans. By providing several different payment options you can reduce payment friction by allowing customers to pay with credit cards, ACH, or ApplePay, The easier you make it for your customers to pay, the more you increase your chances of getting paid on time.
3. Add Late Fees
While adding payment penalties can seem to create friction between you and a customer, it is common practice in many industries. Late fees are not only a way of making additional income but are an extremely effective deterrent, increasing on time payments. The key to collecting on late fees is to ensure you include the terms on the invoice. If after 30 days payment is not made, a 1% late fee will be automatically added to the invoice. This is known as net 30.
4. Review A/R Regularly
A great practice is to consistently review your accounts receivable in order to keep track of overdue invoices. Overdue invoices hold up your cash flow, which can result in other issues down the road such as not being able to pay employees, vendors, and afford other business expenses.
Through your accounting software, you can run the accounts receivable aging report and view a detailed list of all your unpaid invoices along with the length of time past due.
5. Follow up on invoices timely
Getting paid on time usually boils down to proper communication. With the complexities that come with running a business, things can sometimes fall through the cracks, such as sending out an invoice.
Through A/R automation you can supercharge your current accounting software to automatically send out invoices, payment reminders, follow up messages, apply late fees, and more – with just the click of a button. Due to higher productivity, savvy business owners are increasingly turning to automation technology.
Improving your invoice processes with automation allows you to get paid faster and have more time to be able to focus on running your business.
While the current situation we find ourselves in has definitely had an impact on our routines and our habits, these practices still apply in and out of the office. Through proper communication, along with the right tools and practices, you can manage your invoicing process from your house, or anywhere for that matter.
While there are several tools that business owners can use to improve their invoicing process, Biller Genie created our accounts receivable automation & e- invoicing solution specifically to reduce outstanding balances and increase cash flow – all while saving business owners precious time. Our subscribers can send out invoices, payment reminders, follow up messages and more – automatically.