7 Ways to Easily Track Your Receivables
It has probably never been easier to start a business than it is today.
19:21 15 October 2019
We live in a world where entrepreneurship is everywhere, and people are more than encouraged to start their own businesses. More importantly, social media and the internet have made it simpler than ever for new companies to reach people all over the world. It doesn’t matter what size your business is; all you need is some Facebook and Instagram accounts, not to mention a website, and you’re good to go. Yet, despite all the advancements that have helped small businesses, one area has always been problematic; handling receivables. Unfortunately, when money is involved, things tend to get a bit more complicated. These are 7 ways for you to track your account receivables.
1. Set a limit
An account’s receivables is basically the money a company owes you for one of your services or products. It’s money that is not paid instantly, but rather after a certain duration. The problem is when you have a lot of work, you find that your receivables start piling up, and you suddenly discover that a lot of people owe you money for service completed or products sold. So, how do you keep track of all that? You need to create a sales outstanding goal to keep track of how much of your receivables you’ve collected so far. Your business will have to set a maximum limit to collect the money, and it should be as low a number as possible –– a month to 45 days is the average. That way, you can keep track of who you collected the receivables from, and who is due to pay for what exact dates.
2. Make the payment easy for your customers
While it is easy to assume that all people are bad, and your customers aren’t paying because they’re trying to scam you out of your money, reality is often different. It happens quite often that your customers want to pay, but they’re having a hard time with it. You need to make it as easy and seamless as possible for your customers to pay the invoices because this will help them give you the money in a timely manner that won’t hinder your cash flow.
That means you need to create online payment systems and electronic ones to make it smooth for different customers to pay in whatever way they want. For example, some people will want to pay through electronic means that include anything from credit cards to PayPal, so you need to make sure that your business has those options to ensure easy and efficient transactions.
3. Create an invoicing system
Nothing is more important than creating an efficient and intuitive invoicing system if you really want to track your account receivables and know where and when the money is coming. It helps if you use digital invoicing templates that will make your life and that of the customer much easier. The samples at Digital-Invoice-Template.com show just how helpful such a form can be and how much time it can save you. Using digital invoicing templates will save you the trouble of having to manually enter the information, which also entails a big probability of errors. Using such an approach means you’ll get paid a lot faster for your services, and the process of invoicing your customers will become a lot simpler.
4. Record received payments as soon as possible
To keep track of your account receivables, another thing you will have to do as quickly as possible is keeping track of payments received. That way your financial statements can remain updated, and you’d be better able to recognize which of your customers is due and which is behind. There are several ways to do that. You can use manual systems where you will basically scan checks and input them into your computer. There are also accounting software that you can use, which is definitely the better option as it will save you a lot of time and effort. QuickBooks comes especially recommended by a lot of people for its efficiency and intuitive interface, as it marks invoices as paid and automatically updates your account balance.
5. Automatic tracking system
Speaking of accounting software, there are some out there that you can use to keep track of your entire payment history. Such invoicing tools can help you easily see whose payments are overdue, and who needs to be invoiced, as well as who should receive reminders. Using software like this might be a bit costly, especially for smaller businesses, but it is actually a great tool to help you get your money on time. There are also free versions and software where you could use these accounting tools to keep track of your account receivables without paying any money. So you should definitely do a little digging to find an accounting solution that can help your business.
6. Record sales
It’s as important to record your sales as it is your payments. Keeping track of what service or product a customer bought from you is essential if you want to keep track of your account receivables, and not doing so can result in losing money actually. This is another one of the functions where accounting software can be of great help. But if you don’t have one, you need to find a manual way to record every sale you ever did so that you can keep track of payments later on.
7. Hire an expert
As a business owner, keeping track of the money your company is owed might sound like a good idea, but it really isn’t. Your best chance to keep track of the account receivables is to hire an expert who can do that for you while you take care of other aspects of the business. They’d have nothing else one their hands basically, and that is why most people hire accountants anyway.
At the end of the day, keeping track of account receivables might sound complicated, but it really isn’t. All you need is a little organization and some focus, not to mention a bit of technology, and you’ll be easily able to get all your money in due time. A win all the way, don’t you agree?