Cash flow management is not only essential for a seamless day-to-day running of small and large businesses, but it is also an important operation for their long term survival. However, many businesses have always been faced with the challenge of not keeping track of their accounts receivable.
A study revealed that late payments cost businesses a grand total of $3 trillion each year. The study went on to say that 10% of invoices (that is, one in ten invoices generated and sent out) aren’t paid on time or they’re not paid at all. What would your business do if you weren’t getting paid on 10% of your invoices?
How Are Cash Flow Management and Accounts Receivable Related?
An effective cash flow management is a critical component that involves the attitude of business towards its account receivable. That is, how the business collects on payments that are due from its clients for services.
Having lots of money owed is a tough spot for any business to be in. For small businesses, it’s tough for them to be owed any amount of money because every penny is crucial and they may not have a cash reserve that can support operations while seeking to collect on outstanding debt. Decreased profitability as well as unpaid invoices do more than negatively impact how your business operates. If you’re looking for funding, these items can make it hard for you to get the loan that you need.
5 Strategies to Help You Get Paid
Here at Clients ARM, we have more than 30 years of experience helping our clients get paid what they’re owed. We’ve used our experience to put together this awesome list of 5 strategies that can help you get your clients to pay you on time.
Offer more than one payment method to clients. How many options do your clients have to pay their invoices? In the past, it was common for a business to offer just one or two methods. Credit card processing used to be extremely expensive. So, many small businesses would avoid them and accept only cash and check. Now, there are several cost-effective payment options that you can offer to your clients. This flexibility is important because it allows your clients to choose the payment method that works best for them. Additionally, it’s likely that providing clients with convenient payment methods can mean that you get paid sooner. Setting up more than one payment method doesn’t have to be difficult. If you’re already using invoicing software, you may have built-in options to choose from.
Hire an agency that specializes in accounts receivable. If you don’t have the time, the desire, or the human capital to take care of your accounts receivable, consider hiring an agency that can do it for you. This helps guarantee that your accounts receivable are always up-to-date. You’ll know exactly where your business stands from a financial standpoint. You’ll have more time to focus on growing your business and providing services to your clients! Ready to find out more? Contact Clients ARM now to schedule your free consultation and learn how our experts can help you for around 40% less than the cost of hiring an employee!
Use accounts receivable software to make the job easier! There is a lot you can do with software designed to help you manage your accounts receivable. Software like PaySimple, QuickBooks, and Zoho Invoice are designed to provide you with real-time tools you can use to create invoices, apply payments, and run customer reports that can give you great insight into the financial health of your business. These tools are fairly inexpensive and often come with a plethora of payment options that take minutes to set-up. Most are very simple to learn to use. The real key is whether you have the time and desire to stay on top of this important task.
Track your cashflow on a regular basis. To ensure that you’re not just guessing at your business’ financial well-being, you should make sure that you track its cashflow on a regular basis. A paper method for tracking cashflow is daunting and time consuming. Using Excel is also time consuming. If you don’t know how to use Excel, the task can become even more daunting. Choosing and implementing a paperless accounts receivable system can help you track your business cashflow with ease, provided that you stay on top of entering the requisite information to compile accurate reports. Cashflow reports are easy to create with software. Practically every AR software choice has a pre-formatted cashflow report you can create with the push of a button.
Resolve client disputes as soon as possible. One reason why clients don’t pay is because they have a problem. It could be a simple problem such as not understanding their invoice. It could be a problem related to the service they received. Unresolved disputes can result in unpaid invoices. Starting the day that an invoice is past due, call the client to give them a friendly and professional reminder that the account is past due. This does a couple of things. First, it reminds the client that they missed a due date. If the client simply forgot, they’ll be glad you called and they may even pay you over the phone. Second, it allows you the opportunity to find out whether the client didn’t pay because they have a problem as some sort. The faster you’re able to answer questions and resolve any other problem, the sooner you’re likely to get paid.
Need Help with Your Accounts Receivable Management?
The cashflow of your business is largely determined by how you manage your accounts receivable. If you need help with your AR, consider Clients ARM. With more than 30 years of experience, it is our mission to effectively manage your accounts receivable from a remote location in a way that helps save you both time and money. Book a free consultation with us today to learn how we can help.