Owning and operating your own small business is an accomplishment in and of itself. Not everyone has the courage and audacity to follow their passion and make their business idea a reality. If you have taken this leap, we applaud you. However, as you know, taking the leap is just the first of many obstacles. In fact, reports suggest that approximately 5 out of every 10 startups fail within the first five years of starting their business. We are not bringing up this statistic because we want to scare you. Rather, we want to stress the importance of wise financial practices.
In today’s blog, we at East Village Merchant Process Services would like to share with you some advice, specifically advice regarding accounts receivable solutions. Fully utilizing professional accounts receivable solutions can boost cash flow, reduce risks, and increase key performance indicators. Learn more about our account receivable solutions, and contact us today with any questions or to learn more about our account receivable management services.
Build Cash Flow System
One of the biggest challenges emerging businesses face is the ability to create systematic cash flow. This is why it is important, as a business owner, to never let your grip on cash flow loosen. To achieve this, consider setting up recurring billing so that you are guaranteed to get paid by your customers on a regular basis. Similarly, configuring regular payment reminders can have a similar effect. Lastly, though it is much easier said than done, make sure that your business is always following established operating procedures.
Send Invoices Regularly
As we just mentioned, staying on top of invoicing is crucial for new businesses. Whether it’s waiting too long or altogether forgetting to invoice customers, companies make this mistake far too often. To prevent this from happening, consider setting up regular billing cycles and even offering incentives for those who make payments early—say, within the first 10 or 30 days.
Streamline the Payment Process
Just as it is important to set up regular invoicing, it is also important to provide your customers with a platform from which they can easily pay their bill. Nowadays, as technology continues to improve, more and more people are not only paying via electronic forms, but they are also coming to prefer and expect this option. To increase the likelihood of getting paid and on time, make sure you offer electronic payment methods.
Review Accounting Operations
In short, the more time you and your staff spend on value-adding activities and the less time you spend on managing accounts receivable, the better. Look closely at the systems and accounts receivable processes that you have in place. If you find that your established methods require a significant amount of manual labor, consider making a change. When it comes to accounts receivable, manual-labor-intensive processes are not only time consuming, but they also increase the risk of avoidable human errors. When reviewing your operations look for processes that can be automated and improved, risks that can be mitigated, and places where costs can be reduced.
Scrutinize Credit Policies
In addition to poor cash flow, another detrimental component to young businesses failing is mounting debt. If you find yourself in substantial debt, it’s time to take a step back and look closely at why. The first place you want to scrutinize is your business’ credit policies. Are you offering too much credit to customers? Are you scrutinizing their creditworthiness and following up on credit references? If not, this could be just the place to start. Once you begin to address your credit policies and closely monitor your customer’s credit, you may start to see improvements in cash flow.
If you are the proud owner of a new business, keep these simple accounts receivable solutions in mind. These tips can help improve cash flow, reduce debt, and streamline your operations and processes, helping you build a stronger, more lucrative business.
If you are in need of receivable solutions, contact us today! We offer both full time and temporary account receivable solutions. Not only do we specialize in accounts receivable solutions but also credit card processing, creative collection solutions, startup credit lines, and more! Schedule your appointment to learn more!