Getting Paid on Accounts Receivable Invoices. It still takes a process to keep the cash flowing.
When we review businesses practices, among those the accounts receivable agings and associated detail, we sometimes still see issues that could be often resolved with some steps and processes to fix issues before the invoice is generated. That speeds up the cash payment process and keeps the cash flowing into the business.
The goal of all accounts receivable invoicing is to ensure timely payment and avoid having your invoice set aside because an issue- requiring manual or special review- another reason to delay payment. So, a little more work upfront helps your customer pay faster.
- Invoice Descriptions The goal is to avoid anything that is not expected. If the customer uses a purchase order, reference it on the invoice. Does the statement of work agree to what the actual invoice states? If the invoice is for progress payments, are they easily agreed to the statement of work or to the contractual agreements. Misunderstandings between the company and the customer mean payment delays and “special” reviews.
- Invoice Design The goal is to ensure that the invoice is processed normally and does not become an exception and require manual processing. If that happens, where is your contact information on the invoice – is it easy to find at the top of the invoice or buried at the bottom of the invoice? Also, invoice formats often rarely change- ensure that “boiler plate” contact name, email, phone, text information is correct.
- Change the Terms Institute payment discounts. For example, a 2% discount for paying within 10 days of the invoice date is a substantial discount but could help reduce financing costs and will increase cash turnover.
- Contact Information Keep the company’s accounting systems’ customer contact information for each customer up to date as well as the anticipated payment methods- whether wire, ACH, ePayments, credit cards or check. That way, the invoices will generate automatically with the correct bill to information so the invoices are emailed or mailed to the correct person/address and expected receipt methods- all ways to make it easier and more seamless to pay.
- Offer More Ways to Pay Most accounting software makes it seamless to link invoices to many choices of on line payment options-Stripe, Pay Pay, etc. Yes, there are fees involved but this offers the opportunity to make it easy for your customer to click and pay- and speed up your cash collection efforts.
- Follow Up One cannot follow up often enough. For very large invoices, contact the customer just to confirm receipt of the invoice, when they will have all their required to process their payable and the expected payment date. Never assume that all the requirements of a critical invoice just happen. Setup a periodic contact process as invoices approach due dates and then focus it as invoices fall into the past due categories. At any step if the efforts determine a service or product issue, then step back and involve the sales team or other customer contact to resolve those issues.