Keeping your accounts receivable in order is a challenge. Often the problem seems to lie with others. According to a 2017 Payment Practices study by Atradius, 92.6 percent of businesses report late payments, 48.8 percent of invoices are overdue, and businesses were forced to write off 2.1 percent of receivables as uncollectible. While we can’t control when and how clients make payments, setting up measures to keep accounts streamlined can clear up the clutter.
A “good enough” system may accomplish the bare minimum, but it will cost you time and money. If you’re like most businesses, dealing with a messy account is also a constant source of stress. Instead, take steps to clean up your accounts and start following efficient account management practices.
Begin with Assessment
Before you can begin to improve your accounts, take time to identify the key problems. Is your customer information out-of-date? Are you failing to qualify customers before extending credit? Or are there inconsistencies between invoices and statements?
Brainstorm and list all the limitations and stressors of your accounts receivable. If you’re removed from the process, gather feedback from the employees who manage your accounts for a clear picture of problem spots.
Choose an Effective Billing Software
Whether you manage your accounts manually or use an inefficient software, it’s time to reevaluate. Consider your system’s capabilities against your accounting needs. At a minimum, your system should be able to create and track invoices, securely store customer data, and keep clear payment records. On top of these functions, you may want the ability to generate reports, automate communications, and export your financial records to tax software.
A single software may not include every function you want, but you can work around limitations by looking for the ability to integrate with other tools, such as eBillity’s Time Tracking + Billing software it is a stand-alone product or you can integrate it with your accounting software such as Quickbooks, Xero or Reckon.
Consider Time Tracking Software
Businesses that charge for services, labor, or need to manage multiple employees will find it valuable to invest in time tracking software. Instead of estimating hours worked or manually transferring time cards, choose a software that automatically stores this information for you. Integrating this function means billing a client for your time becomes faster, even if there are complications such as overtime or rush work involved. You’ll also have a clear record of your hours worked in all in one easily accessible system.
Establish a Clear Credit Approval Process
Many businesses make the mistake of granting credit before properly qualifying a customer. Time runs out, data gets lost, and we lose sight of a customer’s track record. Don’t keep making this mistake. Take the time to establish a clear process including who you will grant credit, how much credit, the length of your terms, and lay out a credit policy. For new orders and first-time customers, always begin with modest numbers to minimize credit risk.
Automate Invoice Reminders
Customers don’t want to make late payments any more than you do. But even the best clients can lose track of invoices, records, or time. Make it easier for your clients to pay on time and reduce the risk of unpaid invoices with automated reminders. You don’t have the time and mental energy to remember when to send each customer a reminder. Instead, let accounting software add ons like Invoice Tracker do the work for you. Draft a few emails, choose the frequency of your reminders, and move on.
Reconcile Your Accounts Regularly
The final part of your new, streamlined system should be regular reconciliation. Even with robust software and smooth automation, errors can slip through the cracks. Consider conducting reconciliation at the end of each month or quarter.
Fixing your accounts receivable may seem daunting, but a multifunctional system can help you get on track with fewer headaches. If your business is missing a time and invoice tracking system, consider eBillity’s integrated Time Tracker + Billing software with Invoice Tracker add-on. Try both for free for 30 days, no credit card required.