There's nothing more frustrating than waiting for money. You've built a budget around it. You've planned purchases or payroll on the expectation of receiving it. You may have even noticed a trend of clients who seem to be nonchalant in getting you paid on time. You're pulling your hair out asking, "Why does this keep happening!?" Keep reading to learn why businesses fail to pay their invoices.
When starting your business, one of the most important decisions you made was the company name. During your legal business registration, you also likely had to choose among "LLC", "Inc", "Corp" and so on. You did research to make sure that no other organization shared your business name. The same can be said for your clients. If you're unaware of their full legal name, you may find your business in a bind if a contractual breach arises.
Here are a few tips to help ensure your company is contracted with and billing the accurate client.
In every business and at every job level, there are negative situations. You may be faced with challenging colleagues or a client who's not holding up their end of a deal. It could be easy to loathe your job or let it get to you. You may then experience mental health challenges or problems with your home life. Or you could empower yourself and learn to face things with a different attitude. Your choice could change the outcome or launch you into something better.
It's easy to assume that the typical victim of fraud will be a consumer. Unfortunately, businesses also fall victim to corporate fraud, with small businesses especially at risk. According to the Association of Certified Fraud Examiners (ACFE), fraud schemes such as invoicing fraud, kickbacks, skimming and billing schemes are on the rise. Small businesses fall prey to these fraudulent activities more than larger organizations because they don't have the same resources or processes to prevent it.
Don't fall victim to business fraud. Use these best practices to keep your business safe.
One of the biggest factors determining the success or failure of a business is how well they manage their accounts receivable. Accounts receivable management is defined as the practice of collecting money that is owed after extending credit for a product or service. You may not think of invoicing as extending credit but anytime your business delivers a product or a service and has to wait on payment, you're effectively giving the other business a credit line. That payment should be received in a relatively short amount of time or your cash flow is affected.
When your sales team closes on a new client, they quickly move on to the next prospect. With just a few moments to celebrate, there are still contracts that need signed and a quota to reach. As the client is set up in your invoicing system, you're given accurate information about the new sale including the client contact and accounts payable department. What happens, however, when the client stops paying? Was your sales team duped? Surprisingly, one of the reasons for nonpayment is because your information is outdated.
If you're running a business or simply part of the accounts receivable department, you know that unpaid invoices can be the bane of your existence. You need money to pay bills. You need money to invest in the business. You need those invoices paid so you don't have to make an uncomfortable phone call.
The best way to get your invoices paid on time is to determine what processes or systems work best for you and your clients. These processes will help you to improve cash flow by increasing consistency, timeliness and accuracy.
As winter melts away, many of us feel inspired to refresh our homes and offices. Spring cleaning doesn't have to stop with the garage. Growing businesses also need to take this time to look at business finances.
In a Quora thread from last year, an owner of a software business shared the story about a client who stopped paying for their SaaS services. After months of nonpayment and no response to follow-up notices, they closed his account. He later chose to sue the software company for closing his account and they went to court. Because their contract clearly stated that they could close his account due to nonpayment, they won their court case.
Freelancers, software companies and marketing agencies are examples of businesses that may work exclusively with other businesses. Because of the potential for litigation, B2B contracts are not only important, but necessary for protecting the interests of these companies.
One of the main reasons for hiring a professional to do your taxes is when you have questions or complex tax situations. For small businesses, freelancers or startup companies, there may not be an accounting department to handle things like invoicing or other accounts receivable tasks. When you're a department of one or someone who's only wearing the accounting hat temporarily, you may have some questions such as...
