Getting paid on time is key to managing your cash flow. But, it can be hard for a very small business to find the time and the skills to keep on top of their accounts receivable. If you're in this position, how can you help ensure better payment by your customers? Here are 5 tips for any business owner:
Outsource Bookkeeping. Trying to do the books on your own as you grow your business can be a fool's errand. Unless this is a part of the job that you love, it's probably best to hire a professional bookkeeper to do it. Having a dedicated service or bookkeeper working on your invoicing and tracking accounts means that it will get done in a more timely manner and you'll never have to wonder if someone owes you money.
Offer Payment Methods. The more ways that today's clients can pay you, the more likely they are to do it quickly. To this end, being able to offer credit card charging, online payment, wire transfers, direct deposit, and mobile payment options will help your clients pay with less hassle...even on the road. You may need to spend some time setting up these various options with your bank, your bookkeeper, or an online service.
Send Reminders. No one likes to have to remind customers about payment, but it's necessary to keep on the top of your client's payment list. Most bookkeeping software today can send out automated reminders via letter, email, or text, so make use of this service. Very delinquent accounts should get phone reminders (from you or your bookkeeper) as well.
Offer Discounts. Businesses, like people, love discounts. Offering special discounts for early payment is a great tool that may cost you a tiny amount of money but will encourage clients to move you to the top of their lists. Standard early payment discounts are usually between .5% and 2% for payment within a week or ten days.
Mail on Odd Days. Certain times of the week and month are busier than others for your clients' accounts payable managers. Get away from the crowd by sending (via mail or email) your invoices and statements at less busy times. For example, many companies email invoices during the week, so try sending yours over the quieter weekend. And statements tend to be mailed at the end or beginning of a month, so consider sending your reminders on the 10th or 15th instead.
Spending some time adjusting how you handle your accounts receivable and getting help making it run smoother, but the investment will be worthwhile when your bottom line improves. Contact a company like Watson & Company Inc. for more information and assistance.