Make invoice paying easy
Getting payments for all your account receivables is not an easy task. It requires that the company constantly remind customers that they have a bill to pay. This process can be pretty uncomfortable. This can get quite uncomfortable when you realise that you have to see your debtors to get payment. Those tasked with collecting payments for your company usually employ different strategies like emails, phone calls, and hiring third-party companies. It is also vital to instruct your team or train them in negotiation tactics and other essential skills.
What are the challenges of handling account receivables
As mentioned earlier, it can be relatively tough to get your account receivables. So, what are some of the challenges that you’re likely to face during this process;
When you create an invoice with insufficient data, it will be more difficult to process. At times, the customers may refuse to make payment on further clarification. Therefore, you as a business owner should scrutinize the invoices before sending them out. This will help you frequently get your payment with little or no complications.
A business organization may make mistakes in collating the items bought and their prices, or they may fail to account for the fact that a client will prefer a specific billing technique for the invoice. Any of these mistakes can cost the company multiple billing errors and reputation.
Also, you may make a mistake in the number of zeros that are inputted in the inviuce. This will result in over-billing, which could also result in a conflict that’s not good for the business.
Failing to Identify data error
Depending on the company’s size or number of staff, a financial expert should be in charge of incoming bills. However, some errors are inevitable. For instance, when an invoice sent has a missing contact address, then the invoice may end up in the waste bin if it cannot find its way to the recipient. It may take days before you notice this error, especially if the due date isn’t anytime soon.
Exceeding days sales outstanding (DSO)
A high DSO implies that clients take too long to settle their debts. This is a red flag concerning the operation of your business. When you notice a high DSO, you need to make sure to review the credit plans you are offering. Check to ensure that you are not giving more than what you can afford, especially if this KPI exceeds the company’s standard. Setting up a new protocol and financial preparation may also be a wise decision.
Best tips to make paying invoices easy
The main financial goal of all business organizations is to improve how it recovers its account receivables. Here are a few recommendations that can help you with account receivable collection:
Create a simple invoice
You may understand the invoice you wrote, but your buyer may not. That’s why you need to ensure that the invoice is simple to read and understand for the layman. You may replace some industry-specific jargon with simpler words that will make the recipient understand you.
Send automated email reminders
The world has evolved, and as a result, it’s easier to reach out to your customers and remind them about outstanding bills. A good tactic to employ is sending automated email reminders. You can employ this tactic to remind your consumers about their unpaid bills while including some other vital information. Doing this will keep your consumers on their toes to pay up on time.
Offer discounts for early payments
When you give financial incentives to your clients for early payments, it may motivate them to pay up on time. However, this type of motivation should not affect your profits. A good financial incentive should not be more than 10% of the total cost.
Create multiple payment plans
Sometimes, a client may let you know that they may not be able to meet up with the deadline or perhaps they aren’t unable to use the payment channel you have offered. The next thing to do is to create a payment plan suitable for the business and the client. The plan should include how the client will make the payment and the duration to pay.