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How Small Business Owners Can Get Paid Faster
When it comes to getting paid, small business owners face the same challenges as big businesses, but with fewer resources to help them collect. Caron Beesley, writing for SBA.gov, quotes a Wall Street Journal survey that showed 64 percent of small businesses had aging invoices. Uncollected receivables make business operations difficult, especially for small businesses—affecting cash flow, hiring, credit with vendors, and ability to provide services. Among the various ways small businesses can get paid faster, good collections practices and policies, apps to speed up sales and billing, and invoicing software are the most effective.
Best Practices for Collections
Don’t let late payments from customers cause cash flow problems for your business. Employ smart practices for collections such as providing good customer relations management, using an effective credit review process, offering discounts for early payments, and using quality invoicing software. Treat customers well and clearly explain your sales and credit policies so they understand when payments are due. Develop a formal written credit review process and use it for every customer to grant or deny credit. Offer a discount for early payment. Visa Canada found that more than three quarters of Canadian small businesses don’t offer discounts or other incentives for early payment. Use invoicing software to keep track of customers and invoices and automate invoice processing.
There’s—You Guessed It—an App for That
Reduce payment delays and lags between sales and payment receipts with mobile apps. Don’t leave a disconnect between your sales and invoicing processes. If your sales and invoicing employees work independently of each other and there are lags or long delays between when the sale is made and when it’s invoiced, a mobile app helps to close the gap between sales and invoicing. Xero lets small business owners and sales staff send invoices, manage customer data, and reconcile bank transactions in real time with a smart phone. Quoteroller lets sales people create accurate proposals in minutes after sales presentations for customers to review, allowing them to close sales faster. QuickBooks Mobile is a free app that comes with QuickBooks Online, and lets you access your accounting information from your smart phone or tablet to send invoices. You can also view customer information, and accept electronic signatures to cut out lags between customer service and invoicing, as LiveCa.ca highlights.
Act Quickly to Collect Payments
Evaluate sales, billing, and collections processes, and eliminate as many delays between sales and payments as possible. The more quickly you collect payments, and the more invoices you prevent from going into past due status, the faster your small business can get paid. Assign consistent payment collection activities to an experienced employee or department and make it a policy to begin collection review as soon as a sale is made. Visa Canada advises encouraging customers to pay with a credit card or e-payment when a sale is made, as well as quickly converting payments to usable funds. A good process for cashing checks and processing credit card payments and a thorough understanding of the turnaround time on those processes make funds available as quickly as possible for business use.
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