If your business struggles regularly with cash flow, there could be a number of reasons why. It may be internal processes that aren't being followed or aren't working. It may be external reasons such as the market or something else altogether. In order to make any changes, you first have to determine the root cause. Instead of scratching your head and getting more stressed...
Answer these questions to address the cash flow challenges of your business.
Whether you're a freelancer, small or growing business, the internet can be helpful or overwhelming when it comes to business advice. Accounting and accounts receivable terminology can also be challenging, especially if you're the only person responsible for your company's finances or if you're growing your accounting department. There's no need to look further because we've done much the work for you.
It's that time of year where the office seems to be a little quieter. Running a business during this time can be a challenge because there's a continual rotation of your colleagues who are out of office on summer vacations. You may have not given much thought to how summer affects your cash flow. Your A/R department may be thin and your clients' accounts payable contacts may be on vacation too.
Here's how to make sure you still have working capital through the fall...
The short answer is YES!
If you're not already charging your B2B customers late fees on unpaid invoices, you should be! You may be concerned that a late fee could be damaging to your business relationship but in fact, it establishes you as a legitimate business owner.
If your client hasn't paid your invoice yet, it could be because they have some questions about your invoice. Invoice disputes can take time to resolve. You may have moved on to other projects or be otherwise busy but if you don't follow up, your invoice remains unpaid. Would you like to avoid invoice disputes altogether?
Every week on this blog, we are sharing best practices and ideas for improving cash flow and supporting your accounts receivable department. Part of setting up your accounts receivable department for success is defining job responsibilities and hiring the right people for the job. By clearly delineating what each position should be doing, your A/R department becomes an efficient, well-oiled machine, increasing cash flow and limiting the need for collections.
If we lived in a world where every client paid their bill on time, we wouldn't have to talk about the "dirty work" of collections. Talking to clients about money can be uncomfortable, especially when you might be taking their non-payment personally. We recommend the money conversation early and often and we highly recommend following up on any invoices that are past due.
Or...
You could automate your accounts receivable collections and save yourself a headache.
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.
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.
