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.