Steps to Improve Receivables Management.
Delayed payments and outstanding receivables are the most common reason for cash flow crises faced by businesses in the UK. Inefficient Accounts receivables management has a big concern for the UK business. According to a survey conducted by Santander Corporate and Commercials, one out of 6 small businesses is more concerned about their cash flow management due to the piling of bad debts.
Then how can business handle their credit better and improve their collection cycle?
Companies that have to prioritize their AR management and address the cash flow issues can tackle it effectively. Businesses need to optimize the AR process and follow best practice implementation for long-term growth.
Here are some simple accounts receivable management tricks that can get you payments on time and have better cash flows:
Proactive Collection system:
Businesses often commit the mistake of not prioritizing the billing. It ensures that its staff or team members know the importance of cash flows into the business. Having a system of proactive billing as soon as the product or service reaches the customer increases the chances of timely payments.
Simple and Clear invoices:
Customers often delay payments when they get invoices that are either complex or generic. Ensure that the invoice generated specifies the total amount with a proper breakdown of the products and services delivered. Implementing a fixed billing system for recurring payments from the customer also ensures receipt of payments on time.
Set out terms and conditions:
When you deal with customers, ensure that they know the terms and conditions of the credit. Also, do provide a concise document that outlines the payment terms. It is also necessary to have written acceptance from the customer of the terms and conditions of your business. Clear communication between both parties regarding the payment timelines and late payment penalties is important.
Easy payment system:
Provide your customers with multiple payment options so they can choose the most convenient options for the payment. Access to comfortable payment options improves their overall experiences and increases the chances of time payments. Acceptance of payments from digital payment methods such as ETFs, PayPal, credit cards, etc. in addition to traditional methods of cash and check ensures completion of payments on the due date.
Follow up:
Follow is the most crucial and delicate part of the AR process. Often the finance department assumes that the issue of invoices will automatically get you payment from the customer. But there are chances customers might delay payments. So it is necessary to have a follow-up system that periodically sends payment reminders to the customer politely and professionally.
Switch to Cloud software:
Managing your accounts receivables in Excel is a redundant and outdated method. It won’t help much in speeding up the collection process. Cloud Accounting software such as Xero, and QBs online will take your AR to the next level. It automates the AR process through functions such as time tracking, invoice generation, automating recurring invoices and follow-up reminders, etc.
Outsource the AR management to Meru Accounting
Meru Accounting is known for providing highly effective accounts receivables management services to businesses across the UK and other countries across the globe. We provide the best combination of professional experts, the latest technology, and processes to meet our clients’ unique organizational needs and provide solutions while revamping the AR system.
Contact us to explore more about our AR outsourcing services and enhance your AR system.
