Accounts receivable happens when a client purchases something but does not pay immediately for their purpose. When you are a smaller business, handling your accounts receivable is a little difficult sometimes, especially if you have to deal with a larger company. But do not worry, here are some tips to help you manage your accounts receivable (A/R) and improve your business.
When you are sending out the invoices to your customers, make sure you the details are accurate. Invoices that are vague, inaccurate or ambiguous will only discourage the customers to pay on time. Instead your payments will be delayed. Also make sure you send the invoice on time as well. Waiting till the last minute on your end is not right either. The sooner you invoice them the sooner they will complete the payment.
Sending the customers automated emails before the due date as a reminder is another way to improve the A/R collection. This is especially easy if you are using an automated system. You can set up the system to send emails to the customers, few days before the due date of payment. You can also do a similar process if they fail to pay on time. Not only will this feature benefit your company but will also make the payment process easy for your customer by reminding them when their next payment due is.
Offering early payment incentives is another way to encourage your customers to pay on time. Offering small discounts depending on how early they make the payment is one way of doing this. For example, offer them a ten percent discount if they pay within the first week and a fifteen percent and a five percent discount if paid within the second week. This is another accounts receivable solution that can get the business improved.
Making it easier for customers to pay their invoices by being flexible with them is another A/R solution. More and more customers are now using electronic payment methods. So if your company is still accepting only cash and checks, it is time to change adopt into the digital world. But, there will be on rare occasions, customers who will pay with cash and checks. So make sure there are payment options for all types; both traditional and electronic methods.
Use an Automated Software
Using an automated software for A/R collection can make the whole process better by increasing its accuracy, efficiency and speed. There will be no need to spend time gazing at spreadsheets and long lists trying to figure out numbers, no need to send emails to customers manually regarding the payments or no need to worry about details being incorrect or outdated. An automated system will take care of everything for you.
Follow these steps and you will not have to worry about A/R collection anymore. With these tips you can both reduce the time and effort spent on chasing after customer payments. Instead you will get to see your business improving with better customer satisfactions as well.