Accounts receivable are like an asset to the company. Thus, by managing the accounts receivable, you can easily increase the turnover of the company.
Here, in this article, we are going to share some tips to increase the turnover of your business with efficient accounts receivable management techniques:
1. On-Time & Accurate Invoice
Your customers will not make payment until they receive an invoice from your side. You should send accurate bills to your customers as soon as possible so that they can make payments quickly. Cloud based apps like Troveworks accounts receivable automation software can automate the process of generating and sending an invoice. Companies who send late invoices put themselves at risk of late payments. Sometimes, the customer does not pay at all. You should not assume that your customer will make a payment without getting invoices. Never let your customers delay in making payment due to sending invoices late.
2. Include Payment Terms
You should describe the payment terms to your new customers in advance so that they do not create any kind of dispute later on. Also, you should mention these terms and policies on the invoices. You should request payment within 30 days. Never forget to mention late payment charges. Usually, the late payment charges are a few percent of your original amount. If you will properly convey all these payment terms and policies, then it will increase the probability of getting paid in advance.
3. Install Cloud-Based Software
The growing technology has led to the invention of the latest accounting software. This latest technology accounts receivable softwarehelps in making your billing and account receivable proves quite simple and easy. The cloud-based accounting system will let you access your financial data anytime and anywhere. Also, you can easily collaborate with your bookkeeping team.
4. Make Payment Process Simple
Some customers make a delayed payment due to unavailability on online payment platforms. You should offer multiple ways to your clients for making payments. Along with online payment platforms, you should allow your customers to make payments in traditional ways. It will definitely help you to collect payment quickly and help in increasing the turnover.
5. Create Strong Relationship with Customers
According to the thumb rule, the best way to collect the due payment from your customers is to build a strong relationship with them. Usually, happy clients are happy to make payment before the deadline. If you are offering top-notch quality products and services along with good customer service, then your customers will trust you. Whether you are running a start-up or have a full-fledged corporation, you should always be friends with your customers. It will help you to collect payment at the right time.
6. Ask For Upfront Money
Another best technique for improving the collection of accounts receivables is asking for upfront money. If you will take a few percent of billing in advance, then only serious customers would show some interest in buying your good and services. Only serious customers will be ready to pay an upfront amount and would ready to pay the amount before the deadline.
7. Simplify Your Billing Structure
Another good way of improving the accounts receivable collection process is to reduce your headaches by switching to a fixed fee billing structure. You should encourage your customer to sign a contract for recurring services or goods. According to this contract, they will offer the same services every month or deliver the same product on a specific date of every month. By signing a contract, you have to offer the same goods or services and charge the same amount. You do not need to generate different invoices and automatic accounting software will send a similar invoice every month. The automatic accounts receivable management system will do few changes like date and send the invoices to the customers. This technique will not just help in improving accounts receivable collection, but also help in retaining a customer for a long.
8. Follow Up
Follow up calls after missed payments are frustrating! But, if you have mentioned the payment rules and regulations to your customers in advance then it will reduce the probability of missed payments. Sometimes, customers fail to make a payment due to some reason. You should send a friendly email for follow-up and ask for the reason for the delay. The accounts receivable system will maintain record of every follow-up for future reference
9. Reconcile Frequently
If you will reconcile your accounting records in an appropriate manner, then there are high chances of up-to-date accounts receivables. How these two are interconnected? You should immediately update the records after receiving the payment. Never let piling up of outstanding invoices because they can be a big threat to your business growth. You should consider investing in accounts receivable solutions for proper record maintenance.