Across the board, small- and medium-sized businesses agree that one of their biggest challenges to running a business is accounts receivable. As a master bookkeeper in Maryland serving Bethesda, Baltimore, and Rockville, Furever Bookkeeping wants to share seven tips to make A/R a little more tolerable — and maybe a little more profitable, too.
7 Tips to Solid Accounts Receivable
It’s important that you have a system and outline in place to make the most out of your accounts receivable. What’s more, a master bookkeeper can help you find cash flow otherwise lost to inefficient systems.
#1. Make Invoicing and Billing a Priority
Very few business owners will say that billing is an enjoyable obligation to perform. Getting paid, on the other hand, is a mandatory one. Cash flow is vital to the success of your company. It’s important that you invoice or bill a project or customer as soon as the work is completed. Waiting even 24 hours extends the process and can cost you money — the money you were unable to make because your cash was tied up in your customer’s pocket.
#2. Create a System
One of the most efficient mechanisms in a business is a system. If you have a system for everything, you can make minor adjustments to fine tune it. You can see where the system is failing. Losing track of bills and invoices can be easy. Establish a system for billing and invoicing so that you can focus on other parts of your business.
#3. Make Payments Fool Proof
In other words, make it easy for your customers to actually pay you. If you have a payment system that involves a swipe of a card, an authorization text, and a phone call from you, then you’ve got a complicated system. Take all the complication away and make it easy for your customers to pay and watch as payments come in on time.
#4. Deliver Reminders
We all get busy with our lives. As a business owner, you understand this more than anyone. It’s important to send reminders. It doesn’t have to be anything confrontational, but it does need to state which service you provided the customer, what the customer owes, and how the customer can pay it.
#5. Hold to Your Payment Deadlines
If you work with vendors or contractors, you need to set payment deadlines and hold them firm. Give a dog a long leash, and it will keep it taut. There’s nothing worse than not getting paid on time and then having to pay fees for your own late payments to others due to your customers’ lack of punctuality. Let your current customers and your new customers know you’re adjusting deadline protocol.
#6. Charge Fair Value
What do your services or products cost? Are you charging enough to keep your business afloat? Review your prices or packages and determine if you need to raise your prices. Did you know about 80 percent of business revenue increase occurs due to selling to existing customers? It’s a great practice to raise your prices until the market stops paying for it. This way, you protect your business and your ability to serve your customers.
#7. Remain Professional
Things can get heated during invoicing. Remain calm and professional. Clients, like yourself, are doing the best they can, and if you want to keep your accounts receivable flowing, you need to retain your customers.