3 Ways to Collect Your Accounts Receivables Much Faster - Our Guide
One of the challenges that businesses encounter is collection payments for accounts receivables on time. A growing list of clients who are not paying their dues as expected is a pain point for business owners. While others may have accepted it as a normal part of operations, you don’t really have to suffer a case of cash crunch if you or your business accountant can shorten the amount it takes to collect your accounts receivables.
Whether you believe it or not, it is very much possible to get your finances in order and avoid problems brought about by late payments—and the best part is that it can be quite easy to do. Now, if you’re tired of chasing after clients and finding yourself in tight spots when the bills start to roll in, here’s what your business accountant can do to collect your accounts receivable much faster:
1. Quicken your invoicing process
One of the biggest mistakes that any business could possibly make when handling their invoices is that they batch them up and send all of them at the end of the week or month. The problem with doing a “one-time-big-time” invoicing process is that it adds a significant amount of time in between the moment you render your services and the day that you finally get paid.
To speed up the entire invoicing process and make sure that you get your payment on time, make sure that your invoices go out no later than the date of delivery. By automatically generating your invoices from your order dates, you can lay out the groundwork for when a client has to pay their dues—and not the other way around.
2. Itemise your invoices clearly
Another reason that businesses end up getting their accounts receivables late is that they send out invoices that are hard to understand or agree with. If your invoice raises more questions than it makes sense, then take it as a sign to start with the process of itemising your invoices clearly. Instead of using mind-boggling unit codes and numbers, use clear item names with detailed descriptions so that your customers know what exactly they’re paying for.
3. Use milestone invoicing to your advantage
You may end up with a larger list of accounts receivables because the costs of your products are too big to pay at one time. If you’re rendering a service or a product that can take quite a bit of time to complete and fully pay off, then it’s a better idea to start billing at milestones instead of waiting upon completion.
Examples of milestones that you can request for payment at include:
Payment for an order of physical supplies that are required to do the long-term project
Meeting specific goals such as 25, 50, and 75 per cent completion
Phases of the project
Admittedly, collecting every single account receivable that is owed to your business can be a frustrating experience because of how long it takes for payment to come through. With the three collection tips mentioned on this list, however, you won’t have to wait much longer.
Get in touch with New Wave Accountants for your small business accounting needs. Book a free 30-minute strategy session today!