For a majority of businesses, the saying “cash is king” has never been more true than it is today. According to a recent Dun & Bradstreet survey, Australian businesses now wait an average of 54 days to receive payment from their customers after issuing an invoice.
If your business is turning over $400,000, those 54 debtor days equate to almost $60,000 of your cash that is still sitting in your customers’ bank accounts! Getting paid 30 days after you issue an invoice instead of 54 days would add an instant $28,000 to your bank balance.
The situation is even worse for small businesses, with customers taking 60 days, 90 days or even longer to make payments. Fortunately, AccountRight can help your business beat the average debtor days and get cash flowing into your business quickly.
1. Get the invoice right
The starting point to getting paid quickly is to get the invoice right. Make sure you have the correct customer contact details (name and address) recorded in AccountRight, make use of email addresses (so the invoice can be emailed), and use the Customer billing rate or set up charge out items so your invoice values are correct every time.
Make sure the invoice is well laid out, and contains all the information your customer needs in order to pay you (or to raise any queries with you). Use the Customise Forms feature to edit your invoice layout to include details such as your bank account number.
2. Invoice as quickly as possible
Issue an invoice as soon as the work is done, and forward it to your customer immediately. In most cases, it’s acceptable to email it to them.
A great tool to assist with getting your invoices out on time and even more importantly, getting paid quickly, is MYOB PayDirect. This is a mobile payment solution which lets you invoice on the spot and take credit card payments from your smartphone. It’s designed for anyone running a mobile business, and helps improve your cashflow. Invoicing on site also eliminates the chore of catching up with invoicing tasks in the evening or on the weekend.
3. Keep track of outstanding balances
If you’re using AccountRight Live, PayDirect syncs automatically so your books are always up to date with the latest information, including customer details and outstanding payments.
This also means that you can instantly see whether a customer owes you money when you meet him or her – and if necessary, use your visit as an opportunity to collect payment. At the end of the month, you or your bookkeeper can send statements from AccountRight to ensure your customers have a complete picture of how much they owe you.
4. Manage slow payers
If some customers are still slow to pay, AccountRight offers a range of tools to help you manage the amounts due, including setting a credit limit and changing a customer’s status to ‘on hold’. This way, if a customer exceeds their credit limit, any sale entered for them will trigger a warning. Similarly, if a customer is placed ‘on hold’, sales to them are disabled and an easy–to-see reminder will alert you.
According to a survey by MYOB, around 60% of businesses find that following up on late payers is easier after switching to AccountRight. Making full use of AccountRight will improve your chances of beating the 54-day average, and reduces the amount of time you spend chasing late payments.