40: Managing And Preventing Unpaid Customer Invoices Whether You Are Starting A Business, You Are S
40: Managing And Preventing Unpaid Customer Invoices Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Virtual Online Bookkeeper, Virtual Assistant Or VA
Businesses have delt with customers not paying their invoices over the years, but the pandemic has heightened the average number of customers who are not paying their invoices on time, and this is putting additional stress on business owners like you. As a business owner, you know that you need to receive payment on your customer’s invoices to continue to have the cash flow you need for your business to survive. Do you have any customer invoices that you are still waiting to collect payment on, or are you one of those business owners who have been lucky enough so far in your business that you have been able to receive payments on all your invoices? If you have invoices that have been unpaid or are overdue, collecting on these accounts receivable amounts are very important for you. Make sure you track and ensure you are still collecting on money that is due to your business. In today’s episode, I am going to talk about how you can manage your customer invoices as well as the best practices to ensure you are receiving payments on time. You may not even believe what the top reasons are that most customers have to say about not paying invoices and the simple steps you can take to get those payments on time. Whether you are getting ready to start your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper, or virtual assistant you are going to want to listen in to today’s episode so that you stay on top of your accounts receivable game. I even have tips for you about how you can eliminate the stress of tracking and receiving payments from your customers in the first place…
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Show Notes:
Businesses have delt with customers not paying their invoices over the years, but the pandemic has heightened the average number of customers who are not paying their invoices on time, and this is putting additional stress on business owners like you. As a business owner, you know that you need to receive payment on your customer’s invoices to continue to have the cash flow you need for your business to survive. Do you have any customer invoices that you are still waiting to collect payment on, or are you one of those business owners who have been lucky enough so far in your business that you have been able to receive payments on all your invoices? If you have invoices that have been unpaid or are overdue, collecting on these accounts receivable amounts are very important for you. Make sure you track and ensure you are still collecting on money that is due to your business. In today’s episode, I am going to talk about how you can manage your customer invoices as well as the best practices to ensure you are receiving payments on time. You may not even believe what the top reasons are that most customers have to say about not paying invoices and the simple steps you can take to get those payments on time. Whether you are getting ready to start your small business, you’re a solopreneur, entrepreneur, small business owner, virtual online bookkeeper or virtual assistant you are going to want to listen in to today’s episode so that you stay on top of your accounts receivable game. I even have tips for you about how you can eliminate the stress of tracking and receiving payments from your customers in the first place…
Welcome Back…We all know that owning a business can be stressful, but if there are steps you can take to be proactive about situations in business that could be causing you stress, wouldn’t you jump at the chance to ensure these steps are being done in your business? Why not eliminate that stress all together? One of the top issues business owners have is collecting on products or services they offer in their business. If you are not collecting payment for your product or services at the time of sale, then you need to invoice your customer for the amount they owe. These amounts that are due to your business are called accounts receivable. Keeping track of your accounts receivable and ensuring you are receiving all these payments is crucial for the survival of your business.
First, I am going to ask you how you are accepting payments. One of the first steps you can make to avoid having to track down your customers and receive your payments is to get your payments at the time of the purchase or sale. You can do this by accepting cash or check or using some sort of digital payment such as debit card, credit card or even Venmo or PayPal. By collecting your payment up front, you will eliminate the need to track each customer’s purchase and send out reminders for them to pay their bill. This will not only help your cash flow, but it will save you a ton of time making calls to your customer to receive your payments.
If you are unable to collect all your payments up front from your customers, you will need to send invoices to your customers. You will want to take some time to consider what your payment terms will be. You may want to have your payment terms be payable upon receipt of the invoice. By doing this, as soon as your customer receives their invoice, the bill would be due, and they should be paying you right away. This is becoming more and more popular, and customers are getting use to the idea of needing to pay the invoice as soon as they receive it. You could also set a certain number of days in which the invoice is due. You could set this due date as 10, 15, 20 or even 30 days from the date of the invoice. Just remember that if you feel like you need the payments from these invoices quickly that you set your due dates with a shorter date range. You also want to make sure that whenever you are invoicing your customer that you do this on a timely basis. As soon as you invoice your customer, you are starting the clock on the amount of time they have to pay the invoice according to the terms you set on your invoice. If you wait two weeks to invoice your customer, you just gave them two additional weeks for them to hold on to the money that you need to run your business.
If you are invoicing your customers, you could be writing manual invoices or you could have a computerized system. If you are writing manual invoices, make sure that you have a way to track who still owes you money. One of the biggest problems many small business owners make is to not track their accounts receivable. Don’t just send out your invoices and trust that everyone will pay you. You need to keep a system to ensure each of those invoices are paid, and you will need to follow up on anyone who has not paid their invoice. If you have a manual system for tracking who owes you money, you could set up a simple spreadsheet, or even keep a copy of each invoice until it has been paid. If you are using a computerized system such as QuickBooks, each time you create an invoice, it will automatically show this invoice in your accounts receivable. You can run an accounts receivable summary listing to see exactly which customers owe you money, how much money they owe you and how past due they are on their payments.
You need to set up a collections process for your unpaid invoices. There are business owners who have waited over six months to over a year to receive payment on an invoice. Decide on how often you will follow up with your customers on their unpaid invoices. One of the most common reasons customers say they have not paid their invoice is simply because they never received an invoice in the first place. If you set up a system to follow up with any customer who hasn’t paid their invoice by a certain number of days, this will help to find any of those customers who say they never received their invoice and will hopefully speed up the receipt of these payments. I would recommend following up with any unpaid invoices over 30 days past due at the minimum. This is also a great reminder if they did receive your invoice but didn’t realize the payment terms.
If you find that your customers are not paying, you may be in a situation where you need to take out a loan or even fund money into your business personally just to sustain the cash flow your business needs. To avoid situations like this, staying on top of your accounts receivable, following up with any unpaid invoice, or even making sure to collect payments up front will save you from needing a loan or your personal funds to continue operations. This is why you should be monitoring your accounts receivable closely.
Another reason why customers state they haven’t paid invoices in the past is that they don’t have the money. I know the pandemic has really brought this reason up to the top of the list. Some customers say they just forgot or lost their invoice. Others may say they were out of the office and just didn’t get a chance to make the payment yet. You can overcome many of these situations with a quick phone call or email to your customer to follow up on the unpaid invoice. Your customer may not have an organized system in place on their end, and by having your systems organized in your business as well as staying on top of your unpaid invoices, you could easily get paid sooner just by helping them know what is due to you.
You know that the pandemic has caused major changes in the way business is being done. More and more businesses have switched over to digital payments. By doing this, you will be more likely to get paid and even if you are sending your customers invoices, just having the option for them to pay by credit card will likely help you get paid faster than traditional payment method like checks. Many customers prefer this payment method. If you have been holding back because of the additional fees, it may be a good time to do a small price increase to help cover any additional charges you could encounter if you make the switch to digital payments such as credit cards.
If you need help setting up a system to track your accounts receivable and make sure that you are receiving payment for all your products and services, let me know. This is an important part of your bookkeeping process and will definitely help your businesses cash flow. You can go to www.FinancialAdventure.com/Contact-Us and let me know if you’d like help. I’ll post a link where you are listening to this podcast so that you can contact me. I want you to know that I am here for you if you ever have questions or need help with your bookkeeping. If you are looking to outsource your bookkeeping, depending on the number of transactions you have per month, you could get your bookkeeping done for as little as $97.00 per month. And don’t forget, you can reduce your stress levels even more by making sure to grab your copy of the 5 Essentials For Stress Free Bookkeeping. This guide is helpful whether you are doing your own bookkeeping for your business, or you are doing bookkeeping for multiple businesses. You can grab this free guide by going to https://www.financialadventure.com/5essentials.
And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you need some accountability, join our PRIVATE Facebook community and post your action item, we’d love to support you.
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