Economic uncertainty is a reality every business owner must navigate, but while macroeconomic factors are largely outside of your control, your billing and collections process for your small to mid-sized business is not. Managing accounts receivable effectively is one of the most direct ways to protect your cash flow and keep your business financially resilient, regardless of what the broader economy is doing. Revisiting and tightening your billing and collections processes is a straightforward step that can make a meaningful difference.
Why Billing and Collections Matter More in Uncertain Times
One fundamental aspect of doing business is billing and collections. Managing accounts receivable can be challenging in any economy. So, to keep your company financially fit, you should occasionally revisit and tighten up billing and collection processes as necessary. Resolve issues quickly. The quality of your products or services — and the efficiency of order fulfillment — can significantly impact collections. You literally give customers an excuse not to pay when an order arrives damaged, late or not at all, or when you fail to timely provide the high-quality service, you promise.
Resolve Billing Disputes Quickly to Protect Cash Flow
Other mistakes include incorrectly billing a customer or failing to apply discounts or fulfill special offers. Make sure your staff is resolving billing conflicts quickly. For starters, ask customers to pay any portion of a bill they’re not disputing. Once the matter is resolved and the product or service has been delivered, immediately contact the customer regarding payment of the remainder. Depending on the circumstances, you might request that some customers sign off on the resolution by attaching a note to the final invoice. Doing so can help protect you from potential legal claims.
Invoice on Time: The Foundation of a Strong Collections Process
Sending invoices out late can also thwart your collection efforts. Familiarize yourself with the latest industry norms before setting or changing payment schedules. If your most important customers have their own payment schedules, be sure they’re officially set up in your system, if possible, so invoicing doesn’t go awry if a new employee comes on board.
Use Technology to Strengthen Your Accounts Receivable Process
Of course, technology is also important. Implement an up-to-date accounts receivable system that, for example: Generates invoices when work is complete, flags problem accounts and allows you to run various useful reports. Look into the latest ways to transmit account statements and invoices electronically. Emphasize to customers that they can safely pay online, assuming you allow them to do so. Last, regularly verify account information to make sure invoices and statements are accurate and going to the right place. Set clear standards and expectations with customers — both verbally and in writing — about your credit policy, as well as pricing, delivery and payment terms.
Set Clear Billing and Collections Standards with Every Customer
Sometimes you might feel at the mercy of your customers when it comes to cash inflows. Yet businesses get to set the ground rules for incentivizing and pursuing timely payments. We can help assess your accounts receivable processes, suggest key metrics to track and explore actions you might take to help ensure customers pay on time.
How RYBD Can Help You Improve Your Billing and Collective Process
At RYBD, we work with business owners to build financial operations that hold up under pressure, and accounts receivable is no exception. Our advisory team can evaluate your current billing and collections process, pinpoint where revenue is being delayed or lost, and recommend concrete steps to improve consistency, reduce disputes, and accelerate collections. We can also help you identify the right metrics to monitor so you always have a clear picture of where your cash flow stands. If your billing and collections processes need attention, that conversation starts by reaching out to RYBD.
