Are you struggling with improving the cash flow of your small business? One of the reasons this might be so is because of the time it takes to collect accounts receivables. Receivables are not yet cash which means you can’t use it yet to pay for financial obligations. The longer it takes for you to collect a receivable the more difficult it would be to pay immediate dues.

 

Here’s how to collect accounts receivable faster and improve your cash flow.

 

Assess Your Collection Policies

Your policy might be one of the causes of slow collection. Determine that your designated employee sends invoices regularly. Include all information necessary on the invoice such as payment terms and interest. Consider adjusting your billing cycle to once a week so that it creates a sense of urgency in your customers. Make your terms and payment method clear to a customer at the time of their purchase.

 

Make Payment Easier

One of the ways to entice new customers and make collection easier is to improve payment. Smooth and easy transactions boost your image. Provide different payment options and make sure the invoices you send contain correct details. Use invoices that allow customers to easily keep records of them.

 

Audit Procedures

Conduct an audit of your collection procedures. Doing so allows you to identify inefficiencies and find possible improvements to the process. Communicate changes to salespeople so that you are all on the same page. Implement a schedule for making follow-ups to customers and for sending invoices. Don’t make promises your business can’t keep.

 

Create a Collection Plan

A plan provides you with guidelines that your staff can follow and return to whenever they encounter and problems with collection. Some suggestions you can include in your plan:

1. Always make a phone call for large unpaid balances.
2. Call a customer 7-10 days before their due date to make sure they got their products on time and ask them when they can pay.
3. Note down promises made and the date they will pay. Doing so creates a sense of urgency in customers.

 

Update Software

Your system might be outdated already, that’s why collecting accounts receivables slowed down. Update and upgrade software to improve data collection, monitor records efficiently, and identify customers with immediate due dates.

 

These tips on how to collect accounts receivable faster keeps your cash flow positive. If you are looking for a partner that can update your books for you, you can review Robookkeeper’s small business accounting services.