Improve Your Profit With These Accounts Receivable Do's And Don'ts
Posted on: 17 March 2022
Are you managing your accounts receivable in ways that increase your cash flow and ensure a healthier profit? If you're not sure, now is the time to learn a few simple ways to do just that. Here are a few do's and don'ts any small business can put into practice to improve their bottom line.
Do Use an Accounts Receivable Account
You can't follow up on payments that you don't know about. This is why it's vital for even the smallest business to use a formal accounts receivable account structure. Every invoice created should be recorded in this ledger and credited when the client pays. You should then know at all times who has been billed, who has paid, and how old open invoices are.
Don't Wait to Invoice Anyone
Customers can't pay invoices they don't have. Simply taking the time to create and send invoices can be one of the hardest parts of good accounts receivable management for small business owners. It's best to do this task every day, but you should never wait more than a few days to bill someone. If you can't keep up, outsource the work so it stays timely.
Do Offer Ways to Pay
In today's business world, clients and customers expect to be able to pay through a variety of different methods. This may include cash, checks, credit cards, online bill pay, payment platforms, texts, and customer portals. If you only offer the traditional methods, your company will probably get paid more slowly than a company that provides more convenient options.
Don't Forget to Follow Up
Businesses that stay on top of payments are more likely to be the squeaky wheel that gets greased. Set up your system to automatically send reminders at regular intervals. Make phone calls to follow up on these. Issue statements every month. Don't have time for all this follow-up? Again, it may be necessary to work with someone to get it done.
Do Consider Your Terms
What terms do you provide for payment? If you send out invoices due in 30 days, customers are more likely to take 45 days to pay. Instead, use 'due upon receipt' to encourage quick payment. Include late fees in the terms. If necessary, highlight the terms so customers notice them. And don't forget the benefit of offering a discount for early payment.
Where to Start
If your accounts receivable could help, start by meeting with bookkeeping services in your area that may know about your industry. They will work with you to implement these effective changes and make sure you stay on top of who owes what. Call today to learn more.
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