Last updated on July 12th, 2021 at 05:13 pm
No matter your business’s size, it’s essential to keep your invoicing and billing system organized. The accounts receivable department must have good cash flow management to keep the business afloat. Indeed, a business that allows overdue payments or inaccurate billing details could cause the downfall of your operation. But, there are many ways for you to keep your receivables from falling into a mess.
- Create A Detailed List Of Your Clients
It is important to set up a list of your clients or customers. It will include the names, contact numbers, and email addresses. A spreadsheet list will help you track which client you are doing what project for, how much payment you are expecting on what date, and how to best contact them. It will help you to monitor deadlines and expedite ones nearing the deadline. You can merge this list with Microsoft Word as well.
- Communicate Your Terms Clearly
The process of billing and invoicing begins before the creation of the invoices themselves. It is because before any transaction, a client or a customer must first be aware of the company’s terms of service. As the one running the business, you need to clearly communicate what you expect from the client. There must first be a mutual understanding on terms without compromising your own. That means it is relevant for you to ask for an initial deposit, whether you are catering to customers or other businesses. There are three benefits to securing a down payment:
- It assures the client that you take your job seriously.
- If the client is reluctant or is late with the deposit, that easily gives you an idea if you need to take the job or not.
- Initial payments add to your current cash flow and lower the gravity of default payments.
- Use Free Invoicing Templates
There are many aspects of business that needs micromanagement. It will save you time and money to relieve your accounting staff or yourself of the burdensome part of administrative work, such as creating invoicing templates from scratch at every project. You can use free templates for an invoice, and there are many professional-looking designs to choose from for consulting businesses, legal firms, freelancing, and more. Some services offer these templates in various formats, compatible with Word, PDF, Excel, Google Docs, and Google Sheets. You can easily edit them and source these templates for free.
- Finalize Payment Methods
As a business, you should have various payment methods so that your clients have options that are comfortable for them. You will receive payment depending on what type of business you are running. Payments are received differently for digital businesses and brick-and-mortar shops. By allowing many types of payment methods, the easier it will be for your clients.
You can choose direct cash payments if you have a retail business; debit and credit cards, or checks for customers and businesses; and third-party payment processors, like PayPal, for individuals and companies. You can also choose a payment plan if another business is sourcing from yours. For example, if you are a supplier, you can send your customers the goods they ordered, and then agree on a scheduled payment plan after they receive the items.
- Train Your Team
Part of organizing the process and successfully managing customer payments ensures that you and your team are on the same page, from policies to operation procedures. For example, your team should know how they will process payments, as well as how to handle checks and the information you need to accept payments. If you are accepting revolving credit, your client may need to fulfill a certain criterion before choosing this type of payment. You may also choose to charge a small fee on payment types if it costs your company handling and paperwork.
- Arrange Files Chronologically
Keeping organized files of transactions is the quickest way you can find what you are looking for. You can create soft copies on your computer and arrange them by month. You can also choose to sub-categorize them by week. Whether you choose to go paperless or keep hard copies in a file cabinet, make sure they are in order. Chronological transactions keep you in the loop in case some need to be completed before the other.
- Log Customer Payments
Keep track of the invoices you give out to clients. You can use a spreadsheet with columns indicating invoice description, invoice number, amount, date invoice creation, and payment date. Create a formula that allows you to monitor how much cash flow is coming in monthly.
Once the clients are paid, always update the spreadsheet and fill in the following columns with information. You can create a drop-down menu at the end to indicate which ones are paid and unpaid as well.
- Pursue Late Payments
Paying attention to customer behavior is another part of efficiently managing your small B2B or B2C company’s cash flow. You may have clients who make delayed payments that are showing through your chronological files. Politely remind them of their obligation to pay and never be shy about mentioning the terms of service they accepted. It is necessary to prohibit them from purchasing from your company until they decide to pay. For customers who are non-payers, you may have to seek the services of a third-party collection agency that will keep pursuing the client on your behalf. You will also have to drop the delinquent customers from your roster.
In any B2C or B2B business, big or small, handling customer billing and payments may seem daunting if you don’t have the right system for it. In this age of technology, some may be comfortable in doing paperwork, while others are going for automation. While there is nothing wrong with whatever method works for you, learning to use software will help you speed things up. Organization and management shouldn’t be frustrating if you can adapt to the times and learn what will help you and your team, if any, run the business as smoothly as possible.