Ever look at your bank balance and wonder why your hard work isn’t reflected there?
Don’t worry you aren’t alone in this, with over 57% of small businesses surveyed by Xero admitting that cash flow pressures in their business are causing them stress. While ensuring you hit sales targets is important, it is just as important to keep a close eye on your debtor balances and make sure your business is able to get that cash into the bank account.
Need help figuring out where to start in reducing your average days to collect? Try our top tips below:
1. Collect invoicing details during onboarding
Making sure your invoice gets to the right person straight away is crucial to getting paid on time. As part of your onboarding process, particularly when dealing with enterprise customers, add a question to confirm the contact details for the invoice and confirm if any other details are required such as a PO number to ensure processing is smooth for the customer.
2. Streamline your invoicing process
In the fast-paced world of startups, efficiency is key. Make sure your invoices are streamlined, professional, and easy to understand. Your invoices should clearly state the payment due date, terms, and contact information. Simplify the process to reduce the chances of disputes and delays.
3. Review your customer payment experience
The easier it is for your customers to pay, the more likely they are to process your payment on time. Consider offering direct debit options and adding credit card payments to your invoices. If you are issuing invoices via Xero, you can easily connect online payment providers such as Stripe and GoCardless to allow customers to pay via Credit Card at the click of a button.
4. Set a debtor review cycle
Implement a debtor review cycle that enables you to monitor the status of all outstanding invoices. It can be easy to fall into the habit of reactive debtor management when you are feeling the cash flow pinch, however, if you proactively review your debtors regularly, you can prevent that pinch.
5. Proactively follow up on your outstanding debtors
Now that you have a regular cadence to review your debtors, next you need to take action. Take advantage of the available automation to send invoice reminders around due dates to ensure they are front of mind for customers. When the automation isn’t enough, set a process for a team member to email and call to follow up on these outstanding invoices. If you don’t have a team member available to do this, our team can help with this process.
Need some help with your debtor process? Get in touch to find out how our team can help.