Getting paid quickly by your customers is what helps enable more cash flow for your business. But getting customers to make payments quickly has become a challenge for many. Delaying payments has become a growing trend that started well before the COVID pandemic.
Faster payments and collections can benefit a business in several ways. Providing the business with immediate access to cash, higher levels of efficiency, and less paperwork floating around are some of them.
But if you as a business owner want to try and get paid faster to help improve your overall cash flow, try employing some of the following tactics to secure funds faster.
Make Sure Your Tech Stack is Up-to-Date
In today's business landscape, new technologies and integrations help make all areas of a business smoother and most importantly, help organize financials and make payments easier. Enterprise Resource Planning (ERP) systems are becoming very popular and can help businesses with automated and more efficient business processes.
Using a system like NetSuite could help speed up the processing times of payments, track invoices, and so much more to help improve the cash flow of a company. Integrated payment processing also allows companies to accept online payments, which is one way to reduce payment delays from customers.
ERP systems do have a learning curve and have a lot of complex features, but the overall benefits of these systems certainly outweigh any negatives or challenges while implementing them.
Advance Payment Collections
One way to increase the speed of payments from customers is by collecting advance payments. This can be done by taking down payments for items or services, or requiring the payment of a certain invoice percentage upfront before work begins. By taking this approach, you will have immediate access to a portion of your funds and it will also help set the tone for if a customer is reliable when it comes to payments.
The potential risk to this method is causing potential customers to be less interested in buying from you if you are asking to collect too high of an amount or collect too early before a project is started. See what other businesses in your industry are charging upfront and use those rates to base yours. In addition, don't take advantage of the customers. Once cash is collected upfront, services should be rendered within a reasonable time frame.
Accept Multiple Forms of Payment
Being a cash-only business or only accept certain types of credit cards is something that will turn customers away from doing business with you. Most B2B companies today typically use credit cards, wire transfers, checks, electronic payments, and even cash to make payments. Limiting the payment methods will add a level of inconvenience to customers when it comes to paying you.
Keep Accounts Receivables Up-To-Date
A simple, yet highly effective strategy to better cash flow is sending invoices as quickly as possible. Some customers will pay invoices as soon as they are received and those quick paying customers need to be capitalized upon.
Having up-to-date accounts receivables will ensure that unpaid invoices are being followed up on as well, to not let open invoices go by the wayside and be forgotten about for extended periods of time. A solid and well-planned follow-up strategy will certainly help stay on top of payments due. If keeping up with the AR processes of your business is a challenge, bringing in an outsourced accounting provider may be beneficial to you and your business.
Maintain Uniform Processes and Formatting
Piggybacking off of the previous tactic, invoice formatting should be clear, concise, and consistent. Not to mention, if using an ERP system, automated. Having a consistent process and timeframe of how invoices are laid out, send out, and collected will make it much more appealing to your customers.
Cash flow is a critical metric to track when it comes to a business's accounting and decision-making. If something like this is difficult to track as a business owner, an outsourced accounting service provider may be just what is needed.
AccountingDepartment.com removes the burden of developing and managing Accounting, including Bookkeeping, Controller services, AP, AR, and more, by providing an expert team of CPAs and other accounting professionals who understand the special accounting needs of growing businesses.
For information about outsourcing one or more of your accounting department functions, contact AccountingDepartment.com for assistance from a friendly, knowledgeable professional.