Cash is king in any business so anything that can be done to can quicken the collection process has to be a good thing!
Here are a few tips of how to use technology to help you to reduce the time it takes for your customers to pay:
Implement a payment service
If you are sending your invoices via your accounting software, some have the functionality to add a payment service to the invoice.
There are different providers for each software but the most common are Stripe or PayPal.
These systems allows your customers to pay by credit or debit card (and also Apple Pay if necessary) and link with your accounting software to create a Pay Now button on your invoice.
When the customer pays you, the invoice is marked as paid and the fee for the transaction is automatically posted in your accounting system, saving you time working out how much the charge will be. When the money comes into the bank, this automatically matches up to the invoice value less the transaction charge making reconciliation a breeze!
If you send recurring invoices, such as monthly retainers, why not get your customers signed up with a Direct Debit?
The most common Direct Debit provider that links with accounting software is GoCardless.
This system works differently for each software with which it integrates, but ultimately when the invoice is sent to your customer, the payment is automatically taken from your customer’s bank on the due date of the invoice – saving them having to remember to pay you, as well as saving you time chasing any overdue invoices.
There are charges for setting up a payment service, but just think of the advantages of being able to collect the money there and then on your invoices.
There are a vast array of systems available to help businesses to track invoices, monitor payments and manage customers who have missed payment deadlines. With an automated accounts receivable system, you can keep track of the status of each invoice, who has paid and what is outstanding. You can also set up automatic reminders at crucial moments in the payment cycle and significantly reduce your administration time.
By automating the chasing of your debts, you can save 7.3 hours on credit control per week and this can boost cashflow by £4,400 for every £100,000 of turnover.
Some accounting systems have the functionality to send reminders to customers where they have overdue invoices. However, these can come across as impersonal and if a customer owes more than one invoice, they could receive more than one email which would give away the fact that the system is then automated.
A system such as Chaser, alleviates this because multiple invoices will be chased in one email that reflects your email address and signature, giving a more personal touch. If you have customers that are normally good payers, you can put these on a different chase schedule to those that are consistently tardy with payments. Then when the customer pays the invoice, they receive a “thanks for paying” email, just another way of building goodwill and reinforcing your customer relationship.
By implementing some of the above strategies, you can reduce the amount of days it takes for your customers to pay you and ensure that you are getting cash in as quickly as possible.
If you are interested in how payment services could work for your business or are tired of manually chasing debts, contact Gavin Hooker, our cloud champion. Gavin will look at ways your systems can be changed to save you time and potentially reduce your outstanding invoices.
If you are interested in Cloud Accounting why not read our other blogs:
Making Tax Digital – 1 year on
5 Minute Guide to Open Banking
The content in this blog is correct as at 14 April 2020. See terms and conditions.