Are You Getting Your Accounts Receivable Payments On Time?
As a business, your livelihood depends on getting something in return for the products or services you are providing to others. While we safely assume that once we send out an invoice a payment will arrive shortly after, this is seldom the case. A common frustration is that once these invoices go out, payments are either habitually late, or worse, non-existent.
Ensuring that your clients are making their payments on time will ultimately protect the stability of your business. As it turns out, you may have difficulty balancing your books if nothing is coming in on time. We’ve listed some easy ways you can communicate with your clients to help you stay on top of your accounts receivable, as well as some steps you can take yourself to streamline the process.
Make it automatic
While it may be frustrating to wait for a payment, it’ll be more frustrating to discover you were waiting for a payment for an invoice that was never sent. To be sure, set up an automated process in which your invoices are sent out once a project is completed or you have made a shipment. This way, you know you have done your part.
Make payments easy
More and more businesses are finding ways to accept payments digitally. Including a payment link in your invoice will decrease the amount of effort required to get that invoice paid. Typically, once an invoice is looked at, a client may make a mental note that it needs to be paid or they may forget entirely. A link will give them the option to get one task checked off their list immediately. With this option they can also pre-select the due date so their payment can be submitted automatically with much less room for error.
Make it worth it
Give your clients some incentive to make early or on-time payments. A discounted invoice could be arranged for prompt payments. This might just be enough of a push to get clients to make their payments when they’re due. On the other end of the spectrum, be sure to warn clients of interest payments on balances that still need to be paid. Long standing delinquent accounts may need an extra level of authority, so don’t be afraid to partner with a collection agency.
Make it clear
Payment terms should be outlined in your contract. And remember, while your payment terms may be clear to you, they may not be so clear to your clients – every company operates differently. Don’t worry about being repetitive on your invoices about the duration in which invoices should be paid. Whether it’s net 15 or net 30, this should be clear on each invoice.
The efforts needed to have your accounts receivable in good shape are minimal, but it’s about being thorough and consistent. Using an outsourced accounting firm may just be the solution you’re looking for to get your accounting back on track. Contact the experts at Tobin & Collins today!