Accounts Receivable - its proper management can mean the difference between “the check is in the mail” and “oh cool, the money is in my account”. Having cash at hand to run your business is a direct result of how you are asking for it, i.e. invoicing. Accounts Receivable, or “A/R” can be summed up as the money that should be coming in or is ready to arrive. This is money owed after services or goods have been provided to a customer. Because your accounts receivable status can largely dictate the cash health of your business, it must be managed with the right methods and tools to keep operations moving.
You have a lot of control over the status of A/R. Through proper invoicing, staying on top of past due items and adjusting how and when you bill, you can keep the cash flow pipeline flowing in the right direction.
Timeliness of Invoices
One of the biggest challenges of the do-it-yourself business owner is promptly quickly invoicing for services or goods. Most of the time it is because said business owner is busy providing those goods and services. Especially in service industries, where custom or a la carte services are being provided, it may require a custom invoice every time. Sitting down at the computer to hammer this task out after a long day of hard work can fall by the wayside in this case.
This is one of Accountfully’s largest client concerns when it’s time to get A/R dialed in. It is also one of the biggest weights lifted off of them once they have outsourced these accounting tasks. The money lost by focusing time on invoicing is quickly earned back by the business owner focusing on providing services and earning sales and earning new clients.
Accuracy of Invoices
Once the invoice is created, accuracy is key. Items must be clear and detailed, ensuring payment can arrive swiftly and that credibility is not lost with errors in items or pricing. If you haven’t already defined parameters in a contract such as pricing, terms of payment, etc., make sure you are clear now. If you already have an agreement that outlines these items, your invoice needs to match these to a tee.
Outline Your Payment Parameters
Outline when you need payment and what happens when you are paid late. Are you allowing 5, 15, 30 days for payment? What type of payment do you need - cash, check, online transfer? Sometimes a client can look at an invoice as a casual suggestion for payment, so be sure that your payment needs are well defined. You will also need to define when you will start charging interest on late accounts. Are you charging late fees too? If so, how much? Do you know what is an industry appropriate amount to charge? These items being defined in writing give you clout when asking for payment once things become late.
Ask For What You Are Worth
Are you charging enough, aka, what your services are worth? Don’t short change your time’s value because you “just want to just get paid”. Consider the investment you have into the project, services or goods when charging a client. If the value of these are a mystery, this is a concern that should be addressed immediately for your cash flow’s sake.
Accountfully by your side means having a handle on your expenses as well as the billing portion. We track and report these items to you in a timely fashion, so you know what you need to charge to make money. The reporting piece is so crucial to knowing how much a project, or goods sold cost you and how much you need to see back to cover things. This requires a lot of insight to get right. Letting us take this piece on will eliminate this guessing game when it comes to pricing.
So the invoice is sent, and in a perfect world, payment is on its way instantly. This is possible too, (more on that later) if you plan it that way.
If you are you using accounting software, follow up may be a bit easier, but not perfect. You can see aging invoices and get a sense of whether they have been reviewed or ignored by the client. This is only if you are invoicing properly; sending them from the program with hard due dates. However, the software is not doing the complete follow up for you, even when you set up automations. Good follow up still takes a manual weekly review to check up on each one. The software will not make phone calls or negotiate payments to make your money arrive.
Accountfully handles the review and follow up for you. We will automate reminders and make the phone calls to get you paid. We also review invoices week over week for you to stay on top of any aging A/R.
So, at the end of the day, how do you get a handle on improving your billing process? Step one is to automate as much as you can. If you do consistent work that is predictable to specific clients, make this an automation. You can set up recurring invoices to send on a certain date. You know the work will be provided, so why not keep your billing in line with these predictable cycles?
Especially in the cases where a predictable work schedule is in play, billing ahead is a great way to set the tone for cash inflow. For example, billing 10 days before the month of work is to be done builds its own payment buffer by setting it up for clients to pay closer to the first of the month. This changes the cash flow cycle to work for you.
This makes a lot more sense than the typical process of billing after the fact. This puts a real hurt on your cash flow. If you don’t get paid for 10-15 days after work has finished, that puts a 45 day swing on that month’s cash cycle in the wrong direction. Plus, you’re essentially providing interest-free credit to your customers. This doesn’t benefit you at all.
Accountfully uses many helpful automations to ensure you are paid in a timely fashion. We also know what systems to implement for a multitude of business types. An example of one of these tools is setting up easy ways to get paid through Bill.com. This program facilitates quick, online transactions. Better yet, Accountfully can be working for you in the background handling all of these details. From the actual defining of fees, to invoicing, to the following up and any collections efforts. So worrying about making any of these billing faux pas can be off of your plate altogether. How does that feel? Hint: it feels like you save a ton of time and worry trying to do what you don’t specialize in.
How do you need more support in your billing and collections efforts? Let us help you get paid. In the meantime, let’s talk some more. We want to hear about any and all A/R challenges you are facing. Chances are, we can get things headed in the proper direction.