Advivo Accountants and Business Advisors Brisbane shares tips on how to manage your debtors (accounts receivable) and get the cash flowing…
The Christmas break is over, and everyone is back to work. This time can be very tight on cash flow, as many people take extended holidays and business owners must wait for customers/clients to return to work and pay their bills.
Debtor management is central to the effective cash flow of your business. Without this, you can leave your finances vulnerable. Luckily, there are things you can do right now to manage your debtors and get the cash flowing.
Be Consistent With Your Debt Collection
The first thing to do is ensure that you maintain the usual invoicing date even in the holiday period so that as soon as customers return, your invoice is already in their inbox. Then you need to ensure that your invoices are the amongst the first to be paid, so be sure to be consistent and predictable with your debtor collection practices.
Automate Your Accounts Receivable Reminders
Another thing you can do is look at is automating the accounts receivable emails. These are easily programmed into your accounting software such as Xero. The software will issue payment reminders, on a pre-set schedule, even when you’re not around. The software typically follows an ‘if…then’ process of automation. Your payment reminders can be scheduled to be sent before and after the payment due date.
After your first few automatic reminders, pick up the phone and speak with your customer. It is important to communicate and understand your customer’s position. It also gives you the opportunity to gauge their situation and offer other payment options such as a payment plan.
Remember 59 percent of invoices are paid after three reminders, so if you automate your reminder or not, make sure you are sending them on a regular basis.
We have a talented team of accountants, business advisors, and accounting consultants who will listen to you and take a hands-on approach to manage your business and individual financial needs. If you’re looking for a new accountant, especially one based in Brisbane, look no further. Call us on 07 3226 1800 or message us on our Contact page.