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How to Get Paid Quicker
Manage accounts receivable and get paid quicker with these tips to increase your working capital.
The Art of Getting Paid Quickly
As companies grow, they’re incredibly likely to encounter cash flow complications, which can lead to problems during a growth phase. Despite having numerous clients, the necessity of being paid in a timely manner by clients is essential. Below we will detail some of the most innovative tips to ensure your cash flow is maintained on your schedule.
Steady cash flow, steady business
Maintaining a healthy cash flow cannot be overlooked in the day-to-day running of a business. If your business cannot expect to cover its expenses, then questions of insolvency can arise from stakeholders.
This is particularly the case in the instance where a business is reliant on a small number of high value clientele. If these clients delay for an extended amount of time then how will your business expect to meet your operating expenditure for that month?
This also important for businesses holding a lot of inventory, where much cashflow can be tied up ineffectively with the cost of stock.
Some companies have been in operation for a number of years, however operating for so long can mean inefficient practices can settle in. Without invoice automation, you’re leaving the task up to a member of your team to complete. Not only is this inefficient, but most you’re most likely exposing your company the potential of error in your invoicing process, which is hugely important. With invoice automation, you set the criteria and let the system (and automated reminders) do the work.
Clients generally process their invoices in bulk, meaning that they’ll have a set day to pay it off. If you send your invoice late, you may have to wait until the next billing cycle to receive payment which can be massively impactful if this occurs often.
It can lead to clients accumulating substantial charges because of potential late payments, not only exposing the possibility to damage your client relationship, but you’ll also have to wait longer to for the amount.
The real beauty of invoice automation lies behind the fact that you can tailor your invoices to each specific client. Doing so will showcase you in a professional, well-organized manner which is extremely attractive to clients who are giving you their money. Ultimately, invoice automation is an aspect of your accounting process that should never get dismissed.
Offering a more extensive range of payment options allows payments to come in more frequently. Companies have begun steering more away from the traditional forms of payment and transitioning more into alternatives such as PayPal, Transferwise and Skrill. Credit cards have become a more attractive option for clients to use; therefore, this should be taken advantage of while understanding the implications of doing so.
Payment options using credit cards will incur a 3% fee on each invoice. If you’re a company which operates in a high-ticket industry, this may not be as attractive to you; however, it opens up the potential for another avenue of payment. We’ve seen company credit becoming a trend in recent years, with companies offering clients internal credit with an interest rate.
If you refine your accountancy plan, you should be able to foreshadow trends within your cash flow. Providing your company is in a position to, allowing reliable clients to pay after a month can increase expected revenue, but most importantly guarantee flexibility to clients which they appreciate.
Communicating efficiently with clients should be maintained even upon the completion of your service. Setting monthly reminders the week before the invoices are due, guarantees you’ve sustained communication with clients – putting your business front of mind when their accounts team is choosing priorities for the payrun.
Your company should be professional and exceptional communication guarantees the highest chances of prompt payment. Be transparent with your clients and keep them aware of what’s going on. Easily automate the process with something as simple as an email list.
You want to focus on not giving clients any reason for not paying up and if they’re unable to, and have set charges that will accrue based on late payments. Keep professional lines of communication & get paid quicker!
Useful Invoicing Tools
There are several invoicing tools, allowing your company to flourish in such a competitive business environment. We spoke before about the importance of invoice automation and how it frees up resources. During this section of the article, we’ll provide references to some of the most useful tools we love!
Due – If you have any invoices that are due, Due undoubtedly is what your company needs. It operates as a fully inclusive online invoicing, time tracking and project management platform. It automates the entirety of this process, allowing you to perform simple setup steps, and have full control of your invoicing process.
Xero – This application focuses more on accountancy, granting you full control over the invoicing process. Ranging from financial analysis to invoice generation, you can set a focus on refining how your business operates.
PayPal – While it’s underrepresented, PayPal has its invoicing application, which is free, while having access to all of the payments you’ve received via PayPal.
Ending Delinquent Client Relationships
While this is an aspect of the business we never want to approach, ending non-paying client relationships is the only option in certain circumstances. Despite having fees that will levied upon late payments, some clients may not have the resources to pay their invoices. In this situation, it’s certainly worth weighing up whether the time investment in chasing the said rogue is worth it?
Time is money, and it’s counterproductive to invest in problematic clients who are avoiding invoice payments. Putting in the time to clients that respond to schedule will increase overall business efficiency but most importantly help you to get paid quickly.
Your business has done exceptionally well to earn payment from clients, and it’s worth getting recognised. Ultimately, to get paid quicker in cash will be the better route to sustaining healthy cash flow, allowing your business to thrive during the most demanding stages of growth.
Well organized companies with due process to manage with the invoicing cycle will outperform those who don’t. Don’t allocate resources to chasing money where a process could have mitigated this instead.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, agencies and entrepreneurs.