In this article, we’ll talk about that one task that is guaranteed to help put cash in your bank account…
Grab your wallet, because we’re going to help you get paid FAST
As always, let’s start with some definitions…
what is Accounts Receivable?
Similar to Accounts Payable…
Accounts Receivable represents the “Accounts” that you hold as a “Receivable”…
That is… the amounts owed to you by your customers
Because it contains economic value (IE a right to receive cash), it’s an asset…
and it shows up on your Balance Sheet.
Why is your Accounts Receivables balance important?
A few reasons…
OK…now that we know about accounts receivable, let’s talk about how exactly we can structure this function to operate EFFICIENTLY and with ACCURACY.
Before you can have a receivable…you need to have an INVOICE (no, it’s not a bill - a bill is what you pay, while an invoice is what you send when you generate money).
The best way to get visibility into the details of this invoice is straight from the contract where the details originated…
so to start, copy your accounting department on customer contracts once they are signed.
Even better…create a group email (it’s free) called “invoicing@[your-domain].com”.
Once you have that part settled, you now have visibility across multiple departments, allowing you to remove yourself from the equation.
Now it’s time to create your invoices efficiently.
Most accounting softwares have a bulk invoicing upload feature, allowing you to enter in the details of every invoice you want to create in a spreadsheet, and upload it all in one shot.
If not, you can create each of them as the contracts get executed
OK…you sent out your invoices.
Now your customer will pay…right?
In our experience, 30% of customers will pay an invoice naturally as part of their process.
The other 70% will require follow up, especially if it’s their first time receiving an invoice from you.
So don’t make the mistake of assuming they’ll pay.
If you want to get paid fast, you’ll need to be proactive.
Here are some nice ways to collect payment:
Request payment upfront
Collect credit card / banking details for autodebit Know what’s even better than collecting payment upfront?
Follow up on outstanding balances continuously Starting to understand the message here?
Request credit check references Some customers are so big that they just won’t budge on autopay / processing payment upfront.
Sometimes…the bees just won’t come to the honey…
and you’ll need to implement more aggressive tactics to get paid.
Let’s explore a few options:
Turn off service If someone isn’t paying you for a service your providing…
Send the account to a collections agency OK..so you’ve turned off service. They still aren’t paying.
Threaten legal action Sometimes…customers just don’t respond to collections agencies, or service interruptions.
Invoicing is a function that you don’t want to neglect…
as it’ll cause you to fall short on your most prized asset: your cash.
Keep this function smooth, efficient, and on top of things, and you’ll keep your cash flow right where it belongs 🤑
And you'll get paid quickly