Managing Receivables for Increased Revenue
Having a steady amount of cash flowing into your company is vital for running any business. Unfortunately, accounts receivables can prevent you getting the cash you need quickly even though you had already earned your revenue. By properly managing receivables, you can get the cash you need faster.
One way you can reduce the amount of time it takes to receive payments is by reducing the amount of time it takes for your customers to get their bills. The sooner the customers can get their invoices, the sooner they can pay you. If you cannot hand them a bill as soon as you are done delivering your product, then you can send them an email. This assures that they will be aware of their need to pay much sooner than if you had send them a bill through the regular mail.
Another way you can get cash faster by managing receivables is by allowing your customers multiple methods of payments. For example, if you can set up an account that allows them to pay online, you may receive the money a lot quicker, since you won’t need to wait for the mail to deliver the payments to you. You can also offer the option of an automatic electronic fund transfer, so your customers can arrange for the required funds to automatically go into your account on a regular basis. This way, they won’t need to remember to pay you.
Sometimes businesses have problems with managing receivables because they are too lenient. If you allow your clients thirty days to pay the bill, you may consider reducing that to fifteen days or less. Furthermore, don’t be afraid to implement late payment charges if your customers prefer to take their time. You may send them an email several days before their payment is due to politely remind them of their bill and the late fees that they may incur. If you have an excellent product or service, then your customers will be willing to pay their bills sooner.
A professional accounting company can also help you manage your accounts receivables. As a business owner, you may be too busy meeting new clients, keeping track of inventory or developing new products to run after every delinquent customer. By hiring a special accounting company, you can be assured that a team of qualified professionals are managing your receivables. This may even be more beneficial than hiring an internal accountant, since you won’t need to pay payroll taxes.
By managing receivables, you can help ensure that your business has enough cash for you to buy new products, pay your employees and perform other daily operations. With cash, you can also reduce debt and grow your company.