When you run a business, having a positive cash flow is extremely important. You need cash coming in to meet all your payment obligations, which means you need a good account receivable system in order to keep things running efficiently.
Create a Company Policy for Payments
First, create a consistent company policy for how payments and invoices are treated across your company. You need to have a consistent system that every salesperson in your business knows how to use for billing customers. You don't want each customer to have their own billing policies and rules; that can get complicated to keep track of and can impact your overall cash flow.
When an order comes in, do you ask for payment when the order is placed, when the order is shipped, or when the order is delivered? Do you allow customers to pay on a monthly basis for reoccurring services, or do you require them to pay on whatever date they order the services? Really think about your current relationship with your customers and come up with a policy that works for most of your customers and for your business.
Clearly Communication Payment Policy to Your Customers
Second, now that you have a written policy that you have educated all your employees on, you need to educate your customers. This may take some time, depending on the systems you have in place.
For long-term customers, if you are changing when payment is expected, be sure to give them a couple of months' grace period to adjust to the new policy so they can account for the changes in the way that they handle their own expenses. Provide both a written explanation of your new payment policy and have your sales representatives and customer service representatives educate customers.
For new customers, convey your payment policy from the beginning.
Use an Electronic Systems to Manage Payments
Finally, you need an electronic system for managing payments. Tracking all invoices and payments electronically will allow you to effectively keep track of your accounts receivable. With an electronic system, you can still print and email out invoices, but you can also email and fax invoices as well. You can even send invoices as a text message link.
With an electronic system, you should also be able to offer more ways to pay, such as electronic checks, debt payments, and credit payments.
Get ahold of your cash flow by establishing a company policy for dealing with payments. Then, you are going to want to clearly communicate this new company policy to your customer. Be sure to use a clear electronic system to manage the entire payment process.
Contact an accounts receivable management service in your area for more information.Share