Accounts Receivable: Make it Easy for Customers to Pay You
Owners of small businesses rely on their customers to pay their invoices on time. On-time payments are essential to maintaining cash flow and business operations. With cash on hand, owners can pay themselves a fair wage, hire new employees, purchase equipment and inventory, and expand their marketing, products or services. When cash is tight, businesses stagnate and business owners struggle to fulfill their financial obligations.
Working with Accounts Receivable
Customer invoices are related to Accounts Receivable. (Learn more by reading my 2021 article, Accounts Receivable: How Much Do Clients Really Owe?) Accounts Receivable is the balance of money due on credit sales for goods and services delivered or used. In accounting software like QuickBooks, Accounts Receivable are listed on the balance sheet as a current asset. By learning how to manage accounts receivable, you are better equipped to manage cash flow. So, what are the best ways to make it easy for customers to pay you? Let’s look at several Accounts Receivable solutions. (Check out this QuickBooks tutorial: How to track what customers owe you: accounts receivables and more
Offer a Variety of Payment Options
One size does not fit all in the business world, so provide customers with several payment options, including:
- Credit card
- Direct deposit from their financial institution
- Online payment
By accepting multiple payment types, you give customers more reasons to pay on time.
Email Invoices to Accounts Payable
Today’s email replaces postal mail for a majority of business invoices. It’s faster, cheaper, and saves paper. Although the invoice won’t get lost in the mail, it may get lost in the organization. For the fastest response to an invoice, make sure to send it to the person or department that handles invoices. This contact may be different than the one placing the order or signing the contract.
Send Invoices on Time
Schedule a time every week to review customer payments and create and send invoices. Don’t allow yourself to get too engrossed in the daily workload and neglect this task. The simple fact is this: You won’t get paid unless you send out an invoice. It’s best to send invoices soon after a project is completed. This practice ties the expense to the project while it’s still fresh in everyone’s mind. Hopefully, a timely invoice leads to timely payment. For recurring invoices, follow an invoicing schedule to minimize confusion and encourage regular payments. (Download our free Bookkeeping Workflow Schedule.)
Put Payment Terms in Writing
Get in sync with clients by outlining payment terms, fees, deadlines, and other expectations in a written contract. Each party must approve the contract before products and services are exchanged. If an invoice becomes an issue, work through your differences while maintaining a positive business relationship. Good communication goes a long way in healthy client relationships.
Make it Easy for Customers to Pay You
Reminding customers of late payments is awkward. To reduce the time, energy, and discomfort of chasing down unpaid invoices, make it easy for customers to pay you. When customers pay their invoices on time, you avoid the pitfalls of mismanaged cash flow, late payments, and unpaid invoices. For more solutions to your customer payment challenges, contact us today. Prosperity Bookkeeping provides a variety of financial services, including QuickBooks support, bookkeeping/payroll solutions, and cash flow advisory services. Schedule a no-obligation consultation today.