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Author Archives: Sandi Smith Leyva

Dissecting the Reasons Customers Don’t Pay

By Sandi Smith Leyva | 1 Comment | November 7, 2012

Have you ever looked at your aging report with high hopes that your over-60-days and over-90-days columns would just zero out this once? I have, again and again, and I’m pretty sure I am not the only one!

What’s happening with these clients? In this blog post, we’ll talk about the most common reasons these balances persist and how you can get them to approach zero the next time you look at your report.

Billing Surprise!

The first reason is all about communication. Customers often suspend payments when a bill doesn’t jive with their expectations. A surprise is fun on birthdays and holidays, but never at billing time. If the amount that’s billed is higher than what the customer was expecting, then that can delay or jeopardize your payment.

If you’re new to the accounts receivable role, or are part of a newer business where invoicing is part of getting paid, billing with confidence and consistency is somewhat of a learned skill. Stay in communication with the client throughout your service period—especially if the bill or the project scope begins creeping up. Use a change order to gain the client’s approval for new costs that were not agreed upon in your original contract.

I had a client in Asia that wanted additional work done that was originally in the project scope but was cut due to budget concerns. I was already onsite, halfway around the world, when this came up. It would have been easy to just do it, but I held my ground, presented a change order, and it was not approved. This provided me with the ammunition I needed to say no to the extra work, and avoided all sorts of issues with billing.

Invoice Lost

Playing lost on a TV show makes for great drama, but having your bill lost is not the type of drama you want in your business. Often with billing systems that send invoices via email, invoices become innocent victims of your customer’s SPAM filters. In other cases, a billing address or contact might have changed and cause a billing disconnect..

A helpful invoicing practice can be to request confirmation that it has been received by the person at your customer’s office—i.e. the accounts payable contact, finance manager or other person responsible for payments. If that’s not possible or not appropriate for your business, the next best thing is to follow up about a week before each of your invoices become due to ensure there are no barriers to an on-time payment.

Can’t Pay or No Intent To Pay

In some cases, vendors can’t or won’t pay.

An effective credit process early on can help root out these vendors before you do business with them. If the amount of the bill is significant to you or your business, run a credit check before you do the work.

For commercial companies, check out Dun & Bradstreet, and for individual credit reports, you can go to Experian, Equifax and TransUnion.

If no report is available, it is common to request three trade references and a banking contact that can verify basic details about the customer before you start doing the work. In some cases, the best risk mitigation tool is to request that your customer pay 50 percent up front.

And be careful. I’ve had clients tell me stories that a new client’s deposit check bounced after the work was done. The solution to that is to make the client wait as long as the bank makes you wait.

Simply Forgetful

Perhaps your client has a lot going on. Small business owners are often in their forties and fifties, a time in life with a great deal of responsibility—children, aging parents, and their own business to manage. It doesn’t take much to overwhelm these people. A friendly reminder might be all that’s necessary to get your bill back on their radar screens.

Disapproval or Disagreement Regarding Deliverables

You strive to do a fantastic job for each client, but what happens when a client disapproves of the work you did for them? This, and other scenarios involving a disagreement about deliverables, can be a common reason for a payment’s delay and can represent can uncomfortable situation for both you and the client.

Most of us dislike confrontation, and we procrastinate rather than take the first step in the confrontation. Once you’ve discovered that the bill is late because the client is dissatisfied, you can make it easier on the client by inviting them to share their concerns— and then listening as objectively as you can. This will begin the dialog that needs to take place for compromise or settlement.

Make it common practice in your business to request feedback throughout each project (and especially at completion) to ensure your customers are happy with your work.

Approaching Zero

Making big gains in your accounts receivable balances won’t happen overnight. Commit this month to identifying a few key areas of weakness in your processes—and then take action. A few small steps each month might allow you to look up a year from now with a whole new outlook on your business.

Have other ideas that have helped you make improvements to your company’s AR process? Please share them!

Sandi Smith Leyva, CPA, is the founder of Accountant’$ Accelerator and a popular speaker and writer in the accounting industry. Find her at www.AccountantsAccelerator.com.

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Six Tips for Managing Receivables in QuickBooks®

By Sandi Smith Leyva | 2 Comments | September 27, 2012

The following is a guest post from Sandi Smith Leyva, the founder of Accountant’$ Accelerator and a popular speaker and writer in the accounting industry. Find her at www.AccountantsAccelerator.com.

As entrepreneurs, we work pretty hard getting work done for clients or delivering the goods for our customers, so we just expect to get paid for our work with no problems. But sometimes we have to spend precious time away from the core of our business on accounts receivable and collections, for a variety of reasons.

If you’re wondering how to minimize your time spent in these areas, then you’re in luck because there are many easy and quick things you can do. For those of you on QuickBooks, here are six ideas:

1. Manage by Exception

One way to save time managing anything is to manage by exception, which means to only look at what is “on fire” or “about to catch fire” in your business. The Aging Summary in QuickBooks is good for this, but even better with a little customization.

Find it by clicking “Reports” in the menu bar, “Customers and Receivables,” and “A/R Aging Summary.” Make a decision about when you want to be alerted to unpaid invoices by how many days old they get. For example, if most of your invoices get paid at the 35-day mark, then an invoice that goes 60 days needs attention. You can set the report to only show unpaid invoices over 60 days old so you can focus on those transactions. (Customize Report, Filters, Aging, >=, 60, OK.) Better yet, sort the report by highest dollar invoice to lowest, and you have the biggest unpaid invoices at the top of the list. (Sort by, Total, click the A/Z button to show highest to lowest.)


Memorize that report and make a point to look at it once a month to decide what further action you need to take on those invoices.

2. Make It Convenient for Customers to Pay You

In QuickBooks, it’s easy to customize your invoice using copies of the templates that are included in the software. It’s common to add your company logo, and often, that’s where the customization stops. But let’s go a few steps further so we can make your invoice shout “Pay me fast!” all over it. Here are a few ideas to do that:

  • Provide a variety of ways that your clients or customers can pay you, and spell it out, step by step, how to do just that. On my invoice, I have several boxes: one for PayPal instructions, one that lets clients write in their credit card number and fax or email it back to me in a PDF, and one that describes how to make the check out and where to send it.

Provide customers with any tax information they may need. Complete a W-9 and convert it to PDF format so you’ll have it ready to go when you’re asked for it. Also make a box for your tax ID so it’s immediately available right on every invoice.

3. Invoice Fast

If the job is done on the fifth, why wait until the 30th to get paid? In QuickBooks, you don’t have to. Once any related time and costs are entered, you can create an invoice whenever you want to. If your client is happy with your work, it just makes sense to benefit before that post-project afterglow wears off.

Of course, you can also keep the feeling of gratitude going by sending a ZenCash thank-you note to clients when the project is complete.

4. Use Notes

I’ll tell you a dirty little secret if you promise not to tell anyone. We use one of the custom fields in QuickBooks to alert us which customers have return histories. If you have a large number of clients, this could be handy information for you too.

You can also use Notes to track customers who have a history of late payments, arguing about the bill, and so on. The Notes will help you determine what that customer is costing you in terms of collection time and trouble, and you can make a smart decision (with less remorse) about letting that client go.

5. Go Green

Go green by sending invoices via email. They’ll get there faster that way versus sending them snail mail. To do this, create the invoice in QuickBooks and then check the box on the bottom left of the invoice that says “To be emailed.”

Be careful of two areas where I have made mistakes in the past that have caused me to get paid late.

a) Be sure to enter the right email address. (Once, I sent an invoice to a doctor instead of his accounts payable staff.)

b) Understand that sending invoices via email (and also printing them) is a two-step process. Once you’ve created invoices and saved them, go to the File menu, “Send Forms,” and “Invoices” to complete the delivery process.

6. Use Statements

The statement is a great tool for your customer, and some customers will have their bookkeepers reconcile it each month, which is a good thing for you. It also helps to reinforce the collection of finance charges on overdue invoices.

Try these six tips to manage your accounts receivable better in QuickBooks.

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