There is nothing more painful in running a business than when you have delivered the orders, but your money is not being paid and you need more cash to operate your business. When this happens, you need to go to the school of collecting accounts receivables. Well, this is the school where we learn the five things that will enable you receive payments faster.
When you run a business and your payments come in time, you have cash available to cover all your operational expenses, then, aiding your business run smoothly like an oiled machine. Sadly, this is usually not the case in practice because customers are not always predictable and entrepreneurs are also inadequately prepared to deal with such kinds of customers.
Many a time, business people are so busy delivering their services and keeping customers happy to the total neglect of equally important activities such as account receivable collections. If you don’t have anybody do the collections job, the job never gets done! That’s simple!
To survive in business, Billing and Account Receivable Management which involves receiving payments faster are two critical business systems that must be created and the process must be as follows:
- Assign a Resource to the Billing and Account Receivable Function.
Assign a person—maybe your accounts clerk or sales clerk to be responsible for collecting account receivable. Make the person’s duties, responsibilities and results very clear. Don’t forget to manage by delegation, not abdication; this will help you check on the progress and ensure the job of account receivable is done well. The function must not only concentrate on the net proceeds but also on the withholding taxes associated with the payments.
- Develop a Credit Policy & Standards
The banks don’t loan money without ensuring that you agree to their credit policy, terms and standards. So why do you sell your products and services to your customers without any term, condition and policy in place when you want to receive payments faster? You surely are joking with your business!
Develop your Credit Policy & Standards and ensure that your customers agree to it and append their signature. This can be a simple one or two-page document—very applicable if you run a business where you get paid in 30 days or more after delivery.
- Develop Multiple Payment Options
If you expect customers to pay on time, then you must make it easy for them to make payments. So develop multiple payments options; bank deposits, bank cheques, cash payments, debit card payments, mobile money payments and electronic (online) payments.
Sage Pay Now, integrated to some versions of sage accounting software have multiple payment options to ensure that your customers pay you faster.
- Prioritize Invoicing and Do it on Time
If you don’t invoice your customers, expect them to forget to pay you. If you invoice your customers and do so in time, then expect them to also remember to pay you and even pay you in time.
So, it boils down to prioritizing invoicing and invoicing in time. Study your customer’s cash flow schedules and bill them accordingly to receive payments faster. Also send them reminders via SMS, email or phone call when you realize that the customer has by-passed the deadline for payments! Sage Accounting System makes invoicing simple and easier!
- Acknowledge and Appreciate Customers When they Make Payments on Time
Whatever you appreciate, appreciates. Your customers are human beings, not robots. Human beings love to be complimented when they do what is right and that is what propels them to continue. So what? Acknowledge and appreciate your customers when they make upfront payments or pay their bills on time! A simple “Thank You Message” is all you need to urge that customer to continue the cycle.