How To Streamline Accounts Receivable To Increase Cash Flow?

Accounts receivable is one of the biggest headaches for companies in every industry. The fact that most small businesses don’t have a formalized system in place to deal with accounts receivable can be extremely detrimental to a business’s cash flow. Here are some tips to help you control your accounts receivable.

The first thing that you need to do is create an Accounts Receivable Policy and have it referenced in your company handbook. This policy should outline how long customer invoices will be outstanding, how often customers will be invoiced, etc.

  1. Invest In Invoicing Software

Invoicing is a business process that requires a lot of time and effort. There are many tasks involved, from creating invoices to sending reminders, to collecting payments. A commonly overlooked expense in small business accounting is Invoicing. 

It’s very important to keep track of your customer invoices, but it can be a time-consuming process for even the most organized bookkeeper. If you’re not using an automated system to manage your accounts receivable, your business is most likely facing a number of challenges. By investing in accounting software such as Quickbook account receivable, you can enjoy the following:

  • Getting paid on time
  • Reducing the amount of time spent managing accounts receivable
  • Saving costs by reducing paper usage and cutting down on postage costs
  • Improving customer service through a quicker payment processing time
  1. Enhancing Billing Process

The most important aspect of the accounting function is the billing process. The billing process is a crucial part of your accounting cycle since it is where you collect money from your customers. When you make sure that you are efficiently collecting money from your customers, you will be able to maintain a healthy cash flow. 

In the digital era, it is much easier to streamline the accounting process if you use automated tools to handle many aspects of this process. There are tons of great billing automation solutions available today. You should purchase the right invoicing software that automatically creates your invoice as you get paid. This way, you can focus on getting clients to pay instead of spending time creating and sending invoices.

  1. Offering Different Payment Methods

As long as the payment is in your bank account, you are making money. But collecting payments from customers can be a costly and timely process. It’s also a significant cause of customer dissatisfaction, which can lead to churn. Paying for services and products with credit cards is extremely convenient for customers. It’s easy to do, and the customer doesn’t have to worry about carrying cash or writing a check. 

Credit card payment processing is also fast and efficient. However, the main downside is that processing fees can be expensive and there are many different credit card processors to choose from. This is why you should offer multiple payment options for our customers: credit card, PayPal, check, or direct deposit. The variety of choices helps us reduce the bad debt rate by up to 20%. 

Quickbook Integration

  1. Ask For Upfront-Amount

Getting paid for your work is a necessary evil. Some people aren’t as good at getting their invoices paid on time as others, and it can be frustrating to chase after your money. However, you can reduce the number of times you send follow-up invoices by requesting an upfront payment from your clients. You can integrate the upfront billing method into your accounts receivable to streamline it. This method is absolutely essential if you want to streamline your accounts receivable. 

The main reason behind implementing this method is that it will help you to increase cash flow, and thus, improve your business’s financial health. It involves asking for a fixed upfront amount from the customer. By asking upfront amount, you can ensure the customers are interested in your products and they will pay the rest amount. This system will help in streamlining the due amount and income as well. The business owners should understand the QuickBooks accounts receivable vs income

  1. Sign Agreement With New Client

Are you looking to smooth your accounts receivable process? If so, you should sign agreements with new clients and track revenue in real-time. A standard-issue agreement doesn’t have a place for you to record revenue and expenses. And if it does, it’s not very convenient to use. You might have to switch screens or programs to track payments and revenues. But you can do better than that! You can use a cloud-based solution that allows you to track revenue and expenses while they’re happening. It will save you time, reduce errors, and improve cash flow.

Final Words

Your Accounts Receivable (AR) function is the backbone of your finance organization. If your AR function is not functioning effectively, you are probably making some costly mistakes and jeopardizing your cash flow. This blog post has introduced a few best practices that will help you streamline your AR process to improve collections and eliminate bad debt, thereby maximizing your company’s cash flow.

Grover Banks

I am working as the manager in Troveworks and we are offering the account receivable solution. We have so many clients who are using our software and streamlining their cash flow.

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