Maintaining cash flow is first on a long list of problems small business owners face. Any one of them can tell you that with conviction.
Cash flow is a nagging concern and the pandemic has only tightened purse strings.
It is a grim reality: thousands of small businesses have closed their doors permanently due to Covid-19. Without properly managing cash flow and debt collection, the small businesses that have made it this far face closures in the upcoming months.
With proper accounts receivable practices, your cash flow can be painless.
Technology has evolved for a seamless cash flow experience. Companies utilizing the digital invoice are ahead of the game.
Most of your customers are online. Digital invoicing enables you a better chance of reaching them. In turn, a better chance of getting paid.
Humans make mistakes – it’s inevitable. Digital invoicing mostly eliminates human error. Customers can no longer claim their invoice got lost in the mail or was accidentally thrown out.
Digital invoicing platforms easily accept an array of diverse payment options.
With wider payment options, you are making it easier for the customer to pay you. The more hassle it is for the customer to pay you, the less likely you get paid. Simple as that.
Many platforms enable you to create workflows to automate the entire invoice process.
Once a project is completed, digital invoices can be sent and received without any human intervention required.
Digital invoicing not only saves small businesses money by making invoices more accessible to their clients.
If the business utilizes workflows, a small business will save labor hours normally spent invoicing clients and checking up on receivables. This is time that can be better spent on the revenue-generating activity.
Send payment invoices to your customers as soon as the project ends.
Already, 43% of B2B customers in the US delay payments. By delaying invoices, the ones invoicing become culpable for this surprisingly large number.
Businesses shouldn’t give customers an excuse for late payments. Late payments turn into bad debt.
By invoicing immediately, the odds a customer does not delay payments increase immensely.
Send payments as soon as possible; it will ensure that you get your payments processed much faster.
Ditch the end-of-the-month billing plan, switch to prompt electronic billing.
Be Serious About Collections
Past dues and collections must be tracked with vigilance. The longer left hanging, the less likely you will be to receive them.
It is often seen that debts that go uncollected for a long end up being partially collected or not collected at all.
Make a strict SOP or policy, intimating your clients and customers to clear the payments as soon as the project ends. If the client’s payment is late, give them reminders.
Digital invoicing platforms can be set up to automatically send these reminders after a payment becomes late.
Strictly intimate them until they proceed with the payment in a timely manner.
Outside help may be needed to collect from some accounts. For a small business, where every dollar is important, this help is necessary.
Get more money upfront
The best way to ensure you are getting paid for the work you are doing, is to get paid before doing the work.
Many companies fear their customers will be reluctant to pay upfront or even a deposit. If you are providing exemplary service, your customers will be much less resistant than one may think.
Your business must think of itself as the prize. Without your valuable product or service, your prospects are missing out. Not you.
If a prospect refuses to pay a deposit before you deliver your product or service, they don’t deserve to work with you.
These prospects are most likely the ones’ who delay payments or turn into bad debt. Deposits and up-front payment plans help weed these bad prospects out.
Take The Burden Of A/R Off Your Plate
Small business owners have to keep tabs on so many moving parts: serving their clients, generating new leads, invoicing, following up with debtors and much, much more.
Wouldn’t it be amazing to just get the burden of A/R completely off your plate?
Increasingly, trailblazing entrepreneurs are turning to professional services to handle business operations. This allows the entrepreneur to focus on growing their business instead of the nagging operational duties, like A/R.
Top outsourced A/R teams ensure the small businesses they’ll get paid for the work they complete.
Do the job. Get paid. Simple as that.
With an outsourced A/R team, a small business owner can focus on earning more money in the future, instead of worrying about getting paid the money he already earned.
Sure, with today’s software, managing A/R can be done by almost anyone. For some businesses, this is the best option.
If delayed payments are the norm, this is when a business must look to outsourced A/R management.
Quickbooks and other invoicing software can make your accounts receivable easy. Still, it doesn’t have the human and technological flexibility to ensure customers pay on time.
Jonathan Abenson, founder of Oxygen XL, explained the benefits of outsourced A/R for small business. “As we onboarded a new client for FULL AR services” Abenson said. “The CEO told me ‘Having Oxygen XL on board, is not only a lifesaver but for us a permanent solution to AR, without having to deal with it in house.’”
It’s crucial to team up with the right A/R team for your business. This is one that not only understands the nature of A/R and collecting but also understands your business, its mission, and the customer.
Small business owners are the backbone of this country. They should be worried about delivering the amazing products and services that make them great, not their accounts receivables.
The pandemic has taught us every dollar counts. It’s more important than ever for small businesses to optimize their accounts receivable practices.
Entrepreneurs have found that utilizing professional services can help them grow at rates they never thought possible. Increasingly, this is being applied to A/R.
Using an experienced A/R firm, a small business owner can get peace of mind that completing a job means money in his pocket – HASSLE-FREE.
With the right practices, cash flow doesn’t have to be so hard.