Controlling the accounts receivable is the biggest challenge for any business. One is also so relieved and happy when one makes a new sale and sends out an invoice. The sending of the invoice is an only halfway through, one still needs to get paid. Until funds have been received, it is not a done deal case. And managing of cash flow is an extremely important affair for any small business organization. One needs to stay on top of the organization, and controlling the outstanding receivables is a great way of doing it. Below listed are 5 ways to do it well:
1. Establishing billing policies:
The only reason why outstanding receivables remain hanging is that the billing procedures aren’t communicated well to the customers. If one expects to be paid in advance, they have to be vocal about their needs else the transactions remain incomplete. One needs to make the customers aware of the policies and the expectations right in the proposal.
The other thought could be to completely demand money way ahead before the work is done. Advance payment ensures that the money reaches you before you lay hands on the task. Consider accepting payments online, via credit and debit cards, that will make your transactions more fluid. This will definitely increase the cash flow that is supposed to happen.
2. Sending statements:
Sending out statements on a regular basis might sound like an obvious task, but this is compulsory on the list. If the customer is aware that 15th of each month is when you need to get the payments, that particular customer will be prepared for the same. Emailing of invoices followed by statements is an excellent idea to manage the receivables. Having given a friendly reminder to your customer about the overdue invoices will provide a good base for you to retrieve your payments.
3. Analyze it every week:
Review the accounts every week, and this healthy habit will give you the results of the outstanding accounts, which will guide you to send reminders to the necessary clients. Whichever over dues have lasted, can be addressed immediately and the reminders can be sent. This will reduce the number of payments that haven’t been cleared.
4. Increasing service:
Maybe your service is not working well, which is why there are so many outstanding invoices. The providers, who do well, usually get paid instantly because of the fine quality of work that they produce. Maybe your services need a re-evaluation of the system to make things more fluid and allow better service to the customers. Ask the customers if you are working well, and if the services are up to the mark, or if you are lacking somewhere. If some of the customers have issues with the service, then you can incorporate the corrections, maybe then you won’t have over dues anymore.
5. Get rid of the bad clients:
It may be the fact that you have a bunch of clients who do not want to work or aren’t delivering well. Or it may be the reverse is happening, and the clients that you are hiring are terrible and are of no use. Maybe they are people who you cannot satisfy, and you should consider getting rid of them right away. Sometimes they are negligent and unresponsive and you needn’t really force yourself to pay heed to such clients. They are inefficient and they increase the chances of your company’s failure.
