Doing business of any type is a tricky procedure that is full of risk and uncertainties. But, once taken charge off has very fruitful outcomes. The business owners should analyze the situation and crack the code for getting old of their respective businesses. The best way to increase the chances of gains than that of loss is by balancing the business flows by using accounts receivable software. This will stabilize the function of the business and will give more opportunities for growth and expansion.
Day sales outstanding have been growing rapidly over the past few years, in regard to the advent and development of the technology sector. Payments tend to delay due to the fact that sales cycles take longer and the contracts, payment terms tend to be negotiated for an extended period of time. The delayed payment then impacts the routine operations of the business.
The connected parties like the employees and the suppliers which have to be paid off are also impacted due to the same reason. Accounting problems are a concern everyone would want and seek a solution for and fortunately, we have a couple of useful tools and hacks to help us with quicker and expeditious payments, improve and better your cash flow and work on the overall development and growth of your business.
1. Speedy Billing
The faster the bills or invoices are sent, the faster will be the payments received. Delay in payments by the customers are mostly occurred with delay in the invoices by the sellers. Sending out invoices in a timely fashion will help the business balance its accounts receivable in an orderly manner. Sending out invoices via emails as well as the hard copy is the right way of keeping track of the receivables.
2. Constant reminders
At times after the deal between the seller and the customer is closed, both parties tend to lose attention to the payment schedule. Due to the unorganized system of keeping track of receivable, the company tends to occur unavoidable losses. Keeping accurate accounts receivable database and sending out regular reminders via email, telephone or a face position where you need to chase your money, this can always be avoided by getting an automated system for managing the payment collection
3. Penalty on late payments
There are so many customers who take advantage of the extra facilities they receive from the seller. The companies should have a penalty policy for those customers who pass the due date way beyond their time. Charging extra fees for late-payments is something to consider, as it will motivate timely payments. No one likes to pay more so charging extra fees for late-payments will make the customers pay even before the due dates in some cases. Hence it’s something that the business should work on.
Deposit Required- the companies should mandate getting a minimum of 10% deposit on each transaction. This will account for one of the accounts receivable solutions. Making the 10% advance compulsory will assure and provide some relief to the sellers. The deposit will also help in getting extra money to run the daily operations without a glitch. This will also reduce the difference between the payments and the expenses.
4. Flexible Payment Options
Providing the customer’s different payment options like cash, card, or online payments will put a better impression on the customers and will minimize the payment delay. There are many other options like recurring payment, by installing portals for payments the money from the customer’s bank account will be deducted every month until the payment is completed. This is the best way to get your money on time. The companies should encourage such options for the customers.
5. Credibility assessment
Before making a deal, both parties should know each other especially when it comes to involving a credit facility. Necessary legal steps are to be taken by both the Parties to protect their respective businesses and avoid fraudulent activities in the future. A regular financial investigation should be conducted by the seller providing the credit facility.
6. A better policy for credits
The legal formalities should be paid closer attention to, a lawyer must be appointed to facilitate all the required documentation to save and protect the business. The professional relationship between the seller and customer should always bind by the laws. This way the relationship stays intact for a longer period of time.
The above-mentioned tips must have given you an overview of how to calculate accounts receivable and manage it. The customers must be handled very wisely to maintain a healthy long-term relationship and to get the payments on time. Business owners must understand the art of diplomacy and the significance of timely payments. Both aspects should go hand in hand to have positive cash flows and a successful business.