Accounts Receivable Management Best Practices for Small Business Owners
Small business owners need to be vigilant in managing their accounts receivable. While it represents money owed by customers or clients, which in theory is good since it means that the business is making sales, the money still needs to be collected before it can be used to finance the company’s day-to-day operations.
Thus, without proper account receivable management, you may be putting your company’s future at risk. What can you do about it? Here are some accounts receivable management best practices that can help you improve your cash flow and grow your business.
Perform a background check
Do not do business with any client without first checking their financial and credit history. To be on the safe side do not build a long-term relationship with potential clients who have a long list of unpaid credit.
Set the right terms from the start
Provide your client with an estimate of the project cost and let them know about your preferred payment terms right from the start. Be open to negotiating the terms to make it more convenient for them but make sure you do not sacrifice your profits in the process.
Make it easy for them to pay you
If you want to keep your accounts receivable manageable consider taking the hard work out of the equation. Send electronic invoices on time and provide multiple payment options (PayPal, credit card, bank-to-bank payment, etc.) to expedite payments from clients.
Offer incentives for early payment
You can significantly improve your chances of turning your accounts receivable into cash by offering discounts, freebies, future credits and bonuses for early payment.
Remember, you can take your business to the next level of success by managing your accounts receivable wisely. Follow these accounts receivable management best practices and you will surely keep your business on the right track.
Increase your chances of success by getting your business finances managed today. Book a free consultation with Terry Kime, CPA, at www.paramountbusinessadvisors.com or connect with him on LinkedIn to get your business finances in order without the stress. With Paramount Business Advisors managing your finances can be easier and more exciting than you have ever expected!
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