One of the most frustrating aspects of any business is waiting for the cash to flow in. While some blame can be placed on late-paying clients, low cash flow may be a result of a clunky accounting system. Providing timely invoices to your customers is a critical business activity that is directly connected to your business success. When you’re overhauling your accounting or bookkeeping software, be sure to consult with your accounting services provider to get the best advice on how to streamline and manage invoicing issues.
Effective Invoicing to Increase Cash Flow
Invoices missing information result in costly delays, but creating effective invoices encourages clients to pay sooner as they have all the information at hand. Invoices need to be effectively detailed, including contact information, products and services purchased, and payment terms. Invoices should be generated shortly after a sale to start the collections process earlier. The fewer reasons you give a client to pay late, the greater the impact for a positive cash flow. Being able to change client’s payment behavior through detailed and timely invoices rather than intimidation is sure to increase customer satisfaction over time.
Choosing Accounting Software
Your outsourced accounting service provider can make the best recommendation on what type of software an office should have. While collecting overdue invoices may not be the main objective, more effective collections can certainly increase profitability. Seek out features to make it easier for your bookkeeper or accountant to manage invoicing, such as automatically placing overdue invoices onto an action list rather than having to manually sort through all invoices due. Finding an effective way to control business processes pays off as profits increase.
Accounting System Knowledge
Simply purchasing new software will not immediately solve receivables issues if your staff don't understand how to use it. It’s important that all staff involved in invoice generation be well-versed in all capabilities of the bookkeeping software. Failure to understand features of the program could result in valuable information being left off an invoice. Management needs to ensure that staff have time to learn an accounting system, receive adequate training and are confident in program operation as the implementation date arrives.
A good accounting system needs to maintain a list of accounts-payable contacts, eliminating the need for staff to sort through business cards or emails to find the information they need. Notes can be made for setting the next contact date. An invoicing system should allow you to track customer conversation history so there are records for future queries. Helpful features include having the ability to access a customer’s payment history and finding any outstanding invoices. Being able to provide detailed records to clients eliminates any guesswork on either party’s side.