Do you find yourself in a cash crunch too often? The solution could be shortening the amount of time it takes to collect your accounts receivable.

Here are 5 Tips to help you get your money faster:

1. Send Invoices Out Upon Delivery of Goods or Completion of a Project
Do you send out invoices at the end of the month? If you want to get paid sonner, try changing your process and send invoices out upon delivery. Why wait until the end of the month, or the beginning of the next month to begin the process of getting your invoices paid.
 
2. Invoice at Pre-Determined Milestones for Large Projects
If you have large projects that cover long periods of time, bill at pre-determined milestones rather than upon completion. This might be when you order physical supplies, upon meeting specific goals, or at set periods of time. In addition to having cash coming in on the project sooner, you reduce the risk of not collecting on the full amount in the event your customer fails to pay.
 
3. Make Sure Your Customers Can Understand the Charges on Invoices
Customers may delay paying an invoice that they don't understand or disagree with. To reduce delays in payment because of questions, use clear item names with detailed descriptions. Don't use codes or terminology that your customers might not understand, and don't lump items together. List each item separately and clearly.
 
4. Be Flexible with Payment Options
Accept as many payment methods as possible so that customers can pay you within their regular workflow. Otherwise you get pushed to the back of the line. Some customers have rigid accounts payable procedures. They might usually mail paper checks, or use direct deposits, and some may prefer credit card payments. Even if this means eating additional transaction fees, the improved cash flow will almost always be worth the small additional cost.
 
5. Don't Avoid Asking for Payment
Invoices should be sent out on a regular schedule. Then a reminder should be sent out a week before the due date, and weekly or bi-weekly reminders should be sent until the invoice is paid. You should make periodic phone calls once an invoice is past due, perhaps on a weekly or bi-weekly basis. Some customers may have simply forgotten the invoice, perhaps they had a staffing change that resulted in the invoice falling through the cracks, or they just need to be reminded that you expect payment.

You should also be reviewing your Accounts Receivable Aging reports at least once a month so you are aware of what remains unpaid and can take further action.

As always, if you have questions about your accounting procedures, we're here to help.  Contact us