Every entrepreneur knows that innovation, service quality and hard work are only possible with a steady cash flow. Accountants may at times deal with clients coming up with the most improbable excuses in order to delay the settlement of an invoice. Does that sound familiar?
Evidently, chasing unpaid invoices becomes a burden. There is also a specific etiquette to follow, as the accountant needs to be assertive, but not aggressive. It is not uncommon to even physically chase cheques. How can businesses overcome these difficulties and reduce paying times?
The financial department can follow a few steps. First of all, invoices need to feature all the relevant information, including VAT number, IBAN, BIC code and company address. Be clear about the payment terms, as that could delay the payment for a month or more.
The date of issue of the invoice also becomes crucial in the event of a court case against an insolvent client. It is also important to itemise the bill, to show all the services which your company has delivered to the client.
The priority is to submit the invoice to the client as soon as the work is done. Depending on the day of the month, you may consider making small amendments. For instance, instead of putting December 1 as the invoice issuing date, insert November 30, as in this case it is more likely that the invoice will be processed by the end of December rather than January. Don’t forget to add a personal touch, such as a simple message to thank the client for choosing your business instead of a competitor’s, as this can leave a positive impression.
Always call the client a bit before the invoice due date. This is more personal than sending an e-mail and creates urgency for the client to process the invoice sooner.
After the call, record the client’s name, date and time in a journal, so that if a second call becomes necessary, the accountants will know who they have talked to and when.
An accounting software becomes the most important tool if you are dealing with a large volume of transactions, as this automates many of the processes. With such software the invoices will become easily accessible, well organised and fast to find. When selecting a system, do not to get overwhelmed by the many features it may have, but choose it according to your business needs. For instance, software such as Sage Evolution offers add-on modules, thus allowing you to pay only for what you are actually using. It will also allow you to access thousands of invoices within seconds, no matter how old they are.
The bottom line is that even if an accountant follows all these steps, it is still very likely that there will be the occasional ‘chase for the money’. However, using a systematic and organised approach, your accountants will feel more comfortable talking to clients, and it will feel less like a hunt and more like accounting.
Laine Tiltina is marketing and sales executive at Progressive Information Systems Ltd.