Be Proactive
Despite the importance of regularly maintaining your account receivables, only a few firms thoroughly review their billing procedures. Reviewing how you handle account receivables is essential to the long-term health and maintenance of a healthy financial position. If you’ve been using the same strategy for a long time, it may be time to reconsider your strategy. Also, if your company frequently needs to seek clients for payment on goods or services they received months ago.
Failure to be proactive about handling account receivables can lead to different problems. Small to medium-sized firms frequently encounter this issue because they lack the accounting expertise to handle it or because a single person is kept in charge of handling tax returns, inventory management, payroll management, and operational expenses. This type of accounting will lead to different bottlenecks and problems with the accounting process. It can also be considered to be a reactive system because the company will only respond based on future issues that come up with the invoicing system. The best way to avoid this is to tackle problems before they occur. A good way to be proactive is to admit that there are underlying issues with your current invoicing system and work towards improving the system totally.
The following are some of the best ways for a business to stay proactive;
Automate the billing cycle
Relying on manual effort to start an invoice or statement is one of the most frequent billing process problems. Manual triggers have become an ineffective way to process invoices, especially in an organisation with plenty of transactions. An example of a manual trigger is waiting till the end of the week or month before invoices are accumulated and bills sent. Automating the billing process is a good way to avoid manual billing procedures.
Billing should be automated and start as soon as a service is completed or a product is delivered because delay is the number one enemy of accounts receivable. When you delay creating an invoice after a transaction, it could lead to numerous bottlenecks in the process. You’re expected to set a billing cycle that’s convenient for you.
Also, 2-4 working days before the due date, you should send an electronic transfer notice. Sending an email notification to a buyer who is yet to pay is preferable to not sending one, even if you have to apologize afterward. It keeps them on their toes and ensures that they constantly have you in.
Choose a simple mode of payment
A proactive invoicing strategy must consider all the problems that may arise with clients. One of the most common problems when settling invoices is the mode of payment. Many times, the mode of payment changes or the business has to switch to a better option. As the sales cycle develops, companies should preferably inform the customers about any changes to your mode of payment. This way, users can easily accommodate any changes.
Introduce electronic communication
Never undervalue the impact convenience has on your customers’ ability to pay their bills on time. Electronic communication can help a lot in this regard. When an invoice or billing reminder contains a link to online payment, sending it through email or SMS instead of sending a paper copy saves money and speeds up the resolution of the invoice. There’s a chance that a significant portion of your clients prefers electronic reminders and electronic payment to traditional alternatives. Clients generally want the freedom to pay their accounts whenever and however they please.