Make 2020 the year of avoiding the pains (and costs) of mishandled accounts receivable (AR). Establishing an effective AR process is a crucial part of running a successful business (and our accounts receivable software makes it easy!).
It can also bring a whole raft of benefits to the table – it positively impacts marketing, sales, customer service, and overall operations. But the best part: a reduced stress load. This peace of mind enables you to invest your time, money and energy into growing your business, rather than worrying about how to secure the cash you need but don’t have.
To help you out, we’ve come up with a couple of “AResolutions” to think about so you can to set yourself on the path to success in the new year.
1. Take some time to reflect on the past year and ask yourself some important questions
- Have you created a streamlined accounts receivable process that can be monitored and improved upon over time?
- Do you send email reminders and demand letters as required?
- Do you automatically phone clients according to a process or rules-based system?
- Do you know who your most difficult clients are? Or are you aware of any disputes that might be way-laying payment?
- Are all of your clients’ data accurate so no small errors such as incorrect email addresses are hindering payment?
- Importantly, are building a rapport with your customer? Having to chase debtors doesn’t have to result in ruining relationships, it’s a balance of protecting cash flow and customer relationships.
In short, try to understand whether your AR function is fully taken care of. If you can happily say you’ve got the above covered – give yourself a pat on the back – and keep going.
If you can’t, ask yourself why, and dig into the figures to find out more (use our diagnostic tool). Now might be a good time to get professional advice from an expert like us.
2. Start the year with clean, up-to-date business accounts
This means ensuring your accounts are fully reconciled at least once a month, though weekly is ideal.
The primary reason for frequent account reconciliation is to keep close tabs on cash flow. Bank reconciliation reveals exactly how much cash you have flowing into and out of your business at any given moment.
Having clean, up-to-date business accounts sets a solid foundation for everything else you do. Banks will require tidy accounts if you want to borrow.
3. New year = perfect time to review your terms of business
Having good terms of business in place can save you a world of pain. Talk to your peers, lawyer or local industry association to get the best terms possible for your industry. Solid terms give you a good leg to stand on if things don’t go to plan, such as:
- Your customer is not happy with your product or service
- Expectations on payments (all upfront, percentage deposit, progress payments)
- Late payment compensation (charge late fees and collection costs)
- Events outside your control (bad weather, subcontractors, Russian hackers)
4. Has 2019 been a year of fighting fires?
As a busy business owner, you’ve most likely spent 2019 running from fire to fire then working late into the evening to do your ‘real’ job. The key is focus. If you’re focusing only on the fires and not on the source of the fires then you have a lifetime of firefighting ahead of you.
- What’s the biggest source of pain right now in your business? Where’s the fire?
- Is it a team member? Is it cash flow? Is it a surprise tax bill?
The new year is the perfect time to take a step back… Is there anything you could do to solve this issue so it was less likely to happen again.
- Can you improve your hiring process to better identify ‘bad eggs’?
- Can you add a quality checklist to a procedure to ensure it’s done right every time?
- Can you put a bit of cash aside each month to give you a buffer for unexpected bills?
- Can you find an alternative source of finance to give you some breathing space?
We can help!
Many businesses are burning time, money and energy chasing overdue invoices, taking valuable time and energy away from doing what they love. Debtor Daddy offers a better way that will save you hours each week, reduce stress and increase your cashflow.
Jump on the phone and book a chat with one of our Receivables Specialists or alternatively, start a 14-day trial – no credit card required.