It is one thing to entice consumers and make a sale. It is something else entirely to collect the cash owed to you!!
Accounts receivable or Debtors is what is owed to your business
in contrast to
accounts payables or Creditors which are bills you need to pay.
Without an accounts receivable plan that keeps your cash steadily coming in, your accounts payable will add up quick, as you won’t be able to pay your bills!!
No matter how wonderful your product or service is, how great your online presence may be and how large your client base, none of this will amount to anything if you are not receiving cash that you need to pay your bills!
Bellow are some tips to get your cash coming in at a steady rate:
Accounts Receivable Tips
- Use professional invoices that are easy to understand. An invoice for a product or service rendered should be as specific as possible. Let’s say for example you are a carpet cleaning company who works in other businesses after hours. The invoice should specify the date, the time you entered and exited, number of technicians and the service performed. It should then have the price, the tax and total amount due. It is also a good idea to include an additional amount if paid past the due date. Make sure that the total amount due and due date are clearly defined on the invoice.
- If possible include the invoice with the product or service rather than mailing it at a later date. If you have to send them out, do so immediately following the sale or service. Either way, always include a self addressed envelope for them to send you your payment.
- It’s not a bad idea to offer an incentive for paying on time such as a discount on the next purchase. Not only will this keep your income coming in on time, it encourages repeat business.
- Don’t be shy about getting on the phone and following up if the payment is late. For some people it may have been just an oversight, but if you are finding that you are wasting your valuable time consistently on the same customers, it might be time to reconsider extending them any form of credit.
- Only use collections agencies as a last resort. You will build more business by trying to work with people personally on making the payment than if you involve a third party. Only resort to this extreme if it becomes obvious that the client has no intention of paying their bill with you.
Xero ,MYOB or other accounting packages are now available to enable you to easily do your book keeping and have everything in one place.
At the end of the day, your goal is to make a profit with your small business. In order to achieve this successfully and consistently, you have to have a sure fire plan for collecting payments.