59% of small businesses experience late payments. Working to reduce these late payments and speed up your accounts receivable (AR) process is essential.
If you’re not taking measures to make accounts receivable more efficient, then it could lead to unnecessary strain. It could cause your business to have cash flow issues. Taking steps to improve AR can be well worth it and can help your business run more smoothly.
Fortunately, we’re here to help. Read on to learn how to streamline accounts receivable in your business.
Understanding the Importance of Streamlining AR
If many invoices remain unpaid, it could severely impact your cash flow. It can make it harder for you to manage daily operations. Late payments could lead to missed opportunities and may even put the life of your business at risk.
By taking measures to streamline accounts receivable and reduce the instances of late payments, you’ll improve your business for the better. Improving AR can help your business maintain a positive cash flow, which can help you grow your business and pay for daily operations.
How to Streamline Accounts Receivable
So how can you streamline accounts receivable and reduce the number of missed and late payments? Start by using these effective management tips.
Assess Current Processes
The first step to streamlining accounts receivable is carefully analyzing your current processes. Gain a clear view of how you currently manage accounts receivable and identify where your process may need improvement.
If there are any bottlenecks or common causes of mistakes, be sure to identify them. The more you can understand where you’re currently going wrong, the better off you’ll be when trying to streamline AR.
Start Using Payment Software
The next step to streamlining accounts receivable is to find an automated invoicing system and payment software to use, such as iSolutions. Great software solutions can help you streamline your payments and make the process easier for both you and your clients. Fortunately, iSolutions can integrate with the software that you already use.
The right software can enable your business to automate many important tasks. This includes the creation of purchase orders, inventory tracking, and supplier management. Important features such as automated emails, invoicing, and payment reminders can help you stay on top of payments and make it more likely that you’ll get paid quickly.
AR software can help to make the process faster. It will also eliminate the potential for errors as well.
Help Your Team Adjust
As you add automated accounts receivable software, continue to monitor your processes. Improve them as needed. You may find that some areas remain inefficient and slow payments down.
You’ll want to ensure that your team is trained on the new processes and systems that you’ll be using. Be sure to give them the tools and knowledge they need to use any software that you add to your business.
Be sure that your team knows the best practices for making use of automation and handling accounts receivable quickly and efficiently. By adapting to the new processes, your team can collect payments faster.
Review Outstanding Invoices Often
Also, ensure your team is constantly reviewing and monitoring outstanding invoices. Then, do what’s necessary to get them paid. You’ll want to be sure to maintain positive cash flow by following up on any overdue invoices.
You’ll want to do this in the most polite and respectful way possible to avoid straining your relationships with clients. Try to maintain a balance between getting paid efficiently while also keeping your customers as happy as possible.
Start With Transparency
The more you can set rules for payments and be transparent about your collections process, the higher the chance you’ll have of getting paid faster. Spend time outlining the payment schedule with clients from the very beginning. Be clear and communicative with them.
Adding transparency to the process will help customers take payment deadlines more seriously and stay on top of any payments they owe your company. This will help to build trust and lead to fruitful relationships that are good for both parties.
One of the best things that you can do to streamline AR and improve positive cash flow is to communicate openly with your clients. There are many reasons why an invoice may not be paid, but in many cases, communicating with your clients will lead to resolutions.
If the client is having temporary financial problems, it’s better to know about it. Communicating with your clients gives you a chance to work through problems. You may be able to set up a payment plan or find another solution that can help both parties.
By communicating with your clients and staying in the loop with what’s happening, you can accommodate them if necessary. You’ll also have a better chance of getting paid and continuing your relationship.
Add Payment Options
One of the best ways to streamline accounts receivable is to ensure that clients can pay in several different ways. Using payment gateways and offering many payment options makes it easier for your customers to pay for the goods and services they purchase. It will make it more likely that they’ll pay in a timely manner.
Consider offering clients and customers more convenient ways to pay. This could include allowing payment by credit card, online bank transfers, mobile wallets, or other options.
Verify Client Reliability
If you want to be sure that your clients will pay on time, consider conducting credit checks on customers before they purchase from you. Perform credit checks before giving credit to newer customers. Verifying the reliability of a client can help you avoid problems later on.
Clients who have been verified will be less likely to keep debts and make late payments. As a result, verification can help streamline your overall process and boost positive cash flow.
Taking Steps to Improve Accounts Receivable
If you want to improve your accounts receivable, there are many ways to do it. Using accounts receivable software, monitoring outstanding invoices, and offering more payment methods can all be helpful for creating a more secure cash flow.
Need to automate accounts receivable? Get a demo now to learn how iSolutions can help streamline your accounts receivable.