Tricks to Managing Accounts Receivable
As a small business, it’s extremely important to carefully manage cash flow. Cash flow management is essential for all aspects of the business, and it’s impossible for the company to run smoothly if there are problems with money management. To help your company run as efficiently as possible, make sure to manage your accounts receivable. Here are a few tips to help you manage accounts receivable financing.
Stay on Top of Invoicing
Working as a new business owner means that you’ll be taking on lots of different tasks. When you’re in a customer service environment, there are always a thousand things that you’ll have your mind, but it’s important to stay on track with invoicing promptly. In order to be paid as quickly as possible, send an invoice to the customer as soon as you possibly can. Sending out invoices shortly after the service is provided helps accounts receivable financing funds to be received in a timely manner.
Automate Accounts Receivable
To keep up with accounts receivable financing, consider investing in automation equipment and software. Accounts receivable is a formidable source of cash flow for most service-oriented businesses, and saving time on inputting data can be a huge help. Relying on outdated software to handle accounts receivable can slow down the process significantly. To quickly move through the process of data compilation, consider purchasing the latest financial software to improve accounts receivable management.
After you’ve sent the invoice, continue to monitor the accounts on a regular basis. Accounts receivable financing relies upon customer payments being made on time and in full. To avoid problems in the future, make sure to think about how you’ll handle late payments. In order to preserve customer relationships, it’s a good idea to offer somewhat flexible terms that are fair to both parties. For example, if a payment hasn’t been made yet, consider offering an extension in exchange for a small amount of interest paid on top of the late bill.
Meet Customer Needs
A service-based business has the opportunity to evaluate credit terms and offer flexible payment solutions. If your company needs payment in full as quickly as possible, do not allow long term payment plans just to please the clients. However, in most cases, a balance can be found that’s helpful to the business and the customers. For example, if you’d like to allow payment to be made at a later date, just allow about two to three weeks instead of several months.