Get Paid Faster: 3 Tips
Most companies struggle with it: making more money than they spend, and ensuring that the ebb and flow of revenue and expenses balance out. Vendors and employees get paid on time. Inventory is always available when it’s needed. And there’s enough money left over to continue investing in the future of the business.
You can plan and save and project so that you don’t hit a dry spell, but there’s an element of your financial management that tends to be unpredictable: your customer payments. Here are three ways to accelerate your receivables.
Watch your Language
What do you do when a bill you get says that it’s due “on receipt?” The sender probably assumes that this phrase will mean “pay immediately.” Chances are, those bills get lower priority than those with firm due dates. You might check first to see when finance charges kick in to be safe, but that bill is not likely to be paid as soon as the bill is ripped open or the email reminder read.
Make it clear on your invoices that payment is expected by a specific date. If you say “15 days” or “net 15,”” does the recipient always know what you mean? Is payment due 15 days from the invoice date, from the postmark date, or from the date it was in your customers’ hands?
Most businesspeople know what “net” means, but this is one of those places where you can avoid using accounting jargon. Customers new to the business world will appreciate it, and it makes you seem more human. As does making any customer messages as friendly and polite as possible (until you near the collections stage – you’ll need to be a little firmer then).
The best accounting solutions provide flexibility in setting due dates for sales invoices.
This may just sound like common sense, but are you doing it? Encouraging your customers to pay faster by:
- Providing early-payment discounts?
- Assessing finance charges?
- Accepting payment by debit or credit card?
If you’re not yet using accounting software, you may find that the first two activities listed above can be time-consuming, complex, frustrating processes. You can set up such policies and include explanations of them automatically in your invoices using a cloud-based accounting solution. As for the third, you’ll need to set up a merchant account with a company likePayPal, Stripe, or Authorize.net. There are fees associated with these services, but an improved cash flow would make the expense well worth it.
Enlist the help of a financial professional.
Yes, this would involve another expense, and you may think you can’t afford it. But cloud-based accounting applications have simplified and accelerated the bookkeeping process for professionals as well as small businesses, making it a more economical option.
The primary benefit of outsourcing your accounting to an experienced, reputable firm is obvious. You’ll have more time to attend to the growth and health of your business, knowing that your finances are in good hands.
But accounting firms can also serve as small business advisors. Who better to help you solve cash flow and other problems?
Maintaining a positive cash flow can be a never-ending battle. But you can minimize the ongoing struggle by instituting the right changes.