Small businesses fund their operations from cash generated by the business. While some companies accept their customers credit cards for payment, others invoice their customers or send a monthly statement. This is referred to as selling on credit because you are offering the customer credit terms (i.e. Net 30) to pay the invoice/statement. While many customers will pay within term, others do not, creating an issue that must be managed.
Managing your receivables is a critical process and is often put on the back burner. Unpaid invoices and large balances for receivables can single handedly squeeze the life line from your business.
Who manages your receivables?
Depending on the size of the company, there may be an accounts receivable department that handles applying payments as they are received and collecting past due invoices. Many SMB’s are too small to have a department handling this and the responsibility falls to an office manager or the owner. In each case, the process of collecting past dues invoices is arduous, time consuming and expensive. Unfortunately, many small businesses do not implement a defined process for reviewing the past due receivables, impeding their cash flow.
Technology tools for SMBs.
So how can a small business handle this more efficiently, improve their cash flow and not spend time and money to collect their receivables? By using the same type of technology larger companies have used for decades, now available to small businesses. Using accounts receivable management applications automate the process of reaching out to customers, gathering responses, and providing intelligence to management on actions that are required. These systems can be customized to meet your business practices and can replace the traditional methods of collecting your hard-earned receivables. A/R management systems reduce your cost, provide insights into your customers and how they pay, and dramatically improve your cash flow.
Set the scene for your business’ financial success.
Organizing your ‘house’ in conjunction with technology tools can help. Creating a clear accounts receivable policy with your customers is essential.
- To encourage early payment, offer early payment discounts.
- Give your customers options to pay online or using Venmo, PayPal, credit cards and of course, good old-fashioned checks.
- SMBs rarely levy late fees and penalties, making your invoice last on their A/P. Be clear with your customers about your payment terms and do not be afraid to put them on hold or another form of retribution.
Cash flow issues present one of the greatest challenges to business owners. Experts estimated that 4 out of 5 business failures are a result of poor cash management. Get ahead of your receivables and hire Carly, the last bookkeeper you will ever hire.
Try Expex for 60-days with no fee, no obligation.
We want to ease the burden and stress of arguably one of the most critical functions in a business. Contact us for a review and 60-day free trial. Let us show you how easily you can manage your work flow, grow your business, and service your clients.
Expex is based in Schenectady, NY offering convenient and innovative bookkeeping services to help your business succeed. Our application, Carly, can do everything a traditional bookkeeper does and more. This financial management program expertly fulfills services such as bills payments, bank and credit card reconciliation, and financial records consolidation. Call (518) 389-2305 today to get started, or contact us to learn more about Carly.