11 Tips to Improve Your Accounts Receivable Turnover
One might have heard a lot about builder trends and Quickbooks as they are one of the most prominent tools available in the market. But everything doesn’t start and end with the tools, as a business owner needs to focus on accounts receivable turnover above everything else. After all, the money they sell their product or service on credit cannot be counted as revenue until they have collected it from the client.
Tips to improve the accounts receivable turnover
- Foster better relationships with clients
Experts that offer e-commerce accounting services say that accounts receivable can become strong when they have great relationships with clients. When customers are happy, they are also pleased to pay for the goods and services provided.
- Send invoice on time
Customers can quickly pay when they get a detailed bill on time. Companies, if they invoice on later dates, must also accept late payments. If companies supply the invoices after one month of providing the goods or services, then there are chances that the clients have moved on mentally.
- Be clear about the payment terms
The companies must be clear about the payment terms on their invoices. They need to request the clients to pay the amount in the next 30 days. The company shouldn’t be afraid to include the late payment term charges.
- Minimize the payment duration
Additionally, companies can also shorten their payment terms so that the window for payment decreases. They should determine the payment terms based on the practice ongoing in the industry.
- For early payment, the discount is a must
Clients can pay early at a cost, but at the same time, the company can have a better cash inflow and save time on collection. For example, companies can set up the payment terms to be around 1% ten and 30.
- Consider using cloud-based software
Companies can use cloud-based software to make the billing and account receivable process seamless. When they work in the cloud, they can easily access financial information from wherever they are.
- Make paying invoices simple
When companies provide several ways for customers to pay for their invoices, they make it easier for the clients to align with the payable method that they prefer.
- Get going with account receivable
One of the best methods for managing accounts receivable is to eradicate them. This might not be a perfect solution for service-based companies, but of course, they have an option to accept prepayments before providing the product or service.
- Go for an easy billing structure
Several companies need to cut down on the accounts receivable stress by translating the fixed billing. Whenever a company signs a contract with a client, it needs to offer the monthly services at the same rate. The fixed billing makes it easier for the clients to go for pre-authorized debit.
- Regular follow up
Companies can streamline the collection process by regularly following up with their clients.
- Frequently reconcile
Companies can have an up to date accounts receivable if they reconcile the accounting records frequently.