Managing cash flow starts with tight accounts receivable management. Regardless of what the economy is doing, billing and collections is one area where small businesses consistently leave money on the table. If you haven’t revisited your accounts receivable management processes recently, now is a good time to tighten things up.

Resolve Issues Quickly

The quality of your products or services, and the efficiency of order fulfillment, can significantly impact debt collections. You literally give customers an excuse not to pay when an order arrives damaged, late or not at all, or when you fail to timely provide the high-quality service you promise. Other mistakes include incorrectly billing a customer or failing to apply discounts or fulfill special offers.

For accounts receivable management, make sure your staff is resolving billing conflicts quickly. For starters, ask customers to pay any portion of a bill they’re not disputing. Once the matter is resolved, and the product or service has been delivered, immediately contact the customer regarding payment of the remainder.

Depending on the circumstances, you might request that some customers sign off on the resolution by attaching a note to the final invoice. Doing so can help protect you from potential legal claims.

Bill On Time, Use Technology

Sending invoices out late can also thwart your collection efforts. Familiarize yourself with the latest industry norms before setting or changing payment schedules. If your most important customers have their own payment schedules, be sure they’re officially set up in your system, if possible. This way, invoicing doesn’t go awry if a new employee comes on board.

Of course, technology is also important. Implement an up-to-date accounts receivable system that, for example:

• Generates invoices when work is complete.
• Flags problem accounts.
• Allows you to run various useful reports.

Look into the latest ways to transmit account statements and invoices electronically. Emphasize to customers that they can safely pay online, assuming you allow them to do so.

Last, regularly verify account information to make sure invoices and statements are accurate and going to the right place. Set clear standards and expectations with customers — both verbally and in writing — about your credit policy, as well as pricing, delivery and payment terms.

Set The Ground Rules for Accounts Receivable

During rising inflation, you might feel at the mercy of your customers when it comes to cash inflows. Yet businesses get to set the ground rules for incentivizing and pursuing timely payments. We can help assess your accounts receivable processes, suggest key metrics to track and explore actions you might take to help ensure customers pay on time.