{"id":286868,"date":"2023-08-15T15:16:03","date_gmt":"2023-08-15T19:16:03","guid":{"rendered":"https:\/\/www.maxsys.ca\/?p=286868"},"modified":"2023-08-15T15:16:09","modified_gmt":"2023-08-15T19:16:09","slug":"10-tips-to-collect-bills-effectively","status":"publish","type":"post","link":"https:\/\/www.maxsys.ca\/10-tips-to-collect-bills-effectively\/","title":{"rendered":"10 Tips\u00a0to Collect Bills Effectively"},"content":{"rendered":"\n
Good cash flow management is critical to building a strong business. And collecting effectively on your accounts receivable is a key element in generating healthy cash flow.<\/p>\n\n\n\n
When you tolerate overdue bills, you are effectively financing your customers and hurting your working capital ratio. A shortage of working capital could threaten the very survival of your business.<\/p>\n\n\n\n
Here are 10 tips to help you collect bills faster and deal with late payers:<\/p>\n\n\n\n
1. Be clear about payment terms<\/strong><\/p>\n\n\n\n No sale is final until you have received payment. Therefore, you should communicate payment terms to your clients and make sure there\u2019s no room for misinterpretation. Make invoices as clear and detailed as possible, including not only your terms but penalty interest for late payments.<\/p>\n\n\n\n 2. Get invoices out faster<\/strong><\/p>\n\n\n\n The sooner your customer has the bill, the sooner you will be paid. Ideally, you should arrange to be paid at the time of sale. If you are invoicing. Make sure the bill goes to the customer as soon as you ship or complete a job.<\/p>\n\n\n\n If you\u2019re working on a large job, consider negotiating upfront and\/or milestone payments. For example, you can ask for a deposit at the time the order is made and then a percentage of the payment at various agreed upon milestones.<\/p>\n\n\n\n 3. Explore mobile billing technology<\/strong><\/p>\n\n\n\n For many businesses, mobile devices, such as smartphones or tablets, can be a boon for speeding up bill collection. That\u2019s because they allow you to collect or issue an invoice on the spot. Also consider setting your business to accept credit card and e-Transfer payments from slow payers to speed up the payment process.<\/p>\n\n\n\n 4. Track outstanding bills<\/strong><\/p>\n\n\n\n As part of a cash flow planner, you should maintain a payment calendar. It shows what accounts are outstanding and for how many days. This helps you keep track of cash coming into your business and follow up with late payers. As part of your financial management system, you can also use several key operations ratios:<\/p>\n\n\n\n A. Accounts receivable turnover = Net sales \/ Average accounts receivable<\/em><\/strong><\/p>\n\n\n\n A higher turnover rate generally indicates less money is tied up in accounts receivable because customers are paying quickly.<\/p>\n\n\n\n B. <\/em><\/strong>Average collection period<\/em><\/strong><\/a> = Days in the period X Average accounts receivable \/ Total amount of net credit sales in period<\/em><\/strong><\/p>\n\n\n\n Indicates the amount of time customers are taking to pay their bills.<\/p>\n\n\n\n