7 Management Tips for Accounts Receivable
All businesses have accounts receivable, even if they don't officially label it in their business. Managing it can be a hassle. Billing your clients, sending out invoices, and recording payments into your systems is time-consuming. If it were always so straight forward, it would be simple although time consuming. Yet, clients might be late with their payments or not pay at all! Add in organizing, invoicing, payment types, and customer service requirements for your business and you could end up with a headache. The following tips can make managing accounts receivable easier on you.
Build an Organized System
Having an organized system to handle your accounts receivable is essential for your business. An organized system will mean you spend less time on AR and more time for you to work on your business. Track your payments. Keep an organized system for updating your records. Keep your desk area organized and your files, paper or digital, organized as well. This is important to success in accounts receivable.
Send Bills and Invoices First
Do you have a plan of action when you've rendered a service? Send out bills and invoices as your first action after you render your services. Doing so informs your clients quickly of what they owe. This way can get you paid faster and they’ll have an invoice for their records.
Use Online Billing and Payment Methods
Another great tip you may consider is using internet-based accounts receivable billing systems. These billing systems may benefit you and your business or accounts receivable department. There are several systems available for you to choose from. You just need to research your options and find the one that is right for your business.
These billing systems can send out invoices to customers at the click of a button. This helps you save money on paper, ink, envelopes, and stamps. It also saves you precious time to create and mail them. Electronic invoices also offer the option for clients to print their invoice. Many even provide online payment options which is more convenient for you and your clients.
Multiple payment methods make it easier for your clients to do business with you. Although you may accept cash at your office, you could also accept online payments using a payment processor such as PayPal.
Set a Payment Policy
Payment policies are essential for your business. It creates the rules for your clients to pay by and can also serve as a valuable tool for your staff so that they can answer questions that clients may have. Your payment policy should include any deadlines or fees. All clients including potential, new, and regular clients should have this document readily available to use as a resource. It should be given out and posted in your office.
Set Deadlines and Charge Fees
You do not want your clients to think they can get away with missing payment deadlines or not paying at all. You must create and explain payment deadlines and fees for missed payments. Place these in clear terms in the payment policy. Keep in mind that some states control the fees you can charge. Make sure that you know your state laws related to fees and even interest.
Discounts
Clients who pay early are important to your business. They are your business's favorite people. If you have clients who pay early or you want to encourage your clients to pay early (and in full), consider offering a small percentage off of their bill for doing so.
Be Polite
Customer service can take you a long way when it comes to accounts receivable. You attract more flies with honey than vinegar. Clients should be treated with care, respect, and courtesy. By doing this, they are encouraged to refer your business to their friends and family. Even if someone is late or doesn’t pay at all, it is important to continue to keep all engagement with them polite. This may lessen the likelihood that your business becomes the subject of bad online reviews.
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