Accounts receivable is the money your customers owe you after you have sent them an invoice or a bill. The entire accounts receivable process is essential to a business’s survival and is made up of a number of elements including sending invoices, observing to see if they are paid, taking steps to chase the payments and then matching payments to invoices. Xero’s cloud-based accounting software simplifies the accounts receivable process and streamlines payments leaving you free to focus on your business.
It makes simple business sense – for your business to thrive you need a regular income. If your clients pay you late on a regular basis, you, in turn, could struggle to pay suppliers and staff and meet your overheads. A poor accounts receivable process is one of the reasons many businesses start to flounder. To prevent this, it is essential you create an efficient accounts receivable process that leaves you free to focus on running your business:
Run a credit check
Prior to taking on a client, it’s important to run a credit check to establish if they are good at paying and don’t have a bad credit history. If you know of any other companies that do business with your potential client, have a confidential conversation with these companies and ask if they get paid on time.
Create an efficient invoicing system
To ensure regular payment, it is advisable to send your invoice immediately the work has been completed. Xero enables you to create customised templates, which you can quickly adapt for each client. Simply upload your logo, your payment details and what each client owes you and you’re ready to go. Xero also saves you time by letting you make a copy of the last invoice you sent to a customer. Just update any parts that you need to and send it off to the customer.
Watch closely for payment
Keep a list of all your invoices and check your account regularly for payment. Set up an invoice watch list and only remove invoices from your list once you have been paid in full. To assist you with this process, Xero automatically and securely imports your bank transactions every business day. You can also set up rules for matching your bank transactions automatically to invoices and bill payments, so you can quickly see if a client has paid you.
Follow up regularly on late payments
Following up on late payments can be the most time-consuming process of the accounts receivable process. Xero can help you take the time out of the process by sending your clients automated invoice reminders. Just set how often you want the reminders to be sent out – and your clients will be automatically reminded, until they have paid.
Allow your clients to pay you instantly
One of the other delays in the accounts receivable process is the actual payment process. Rather than waiting for your customers to EFT you or send you a cheque, Xero allows you to set up an immediate “pay now” option that allows your customers to pay you instantly with either a debit or credit card or from their PayPal or Stripe account.
Xero is committed to helping businesses by ensuring they get paid faster and their cloud-based accounting services are used by over one million people worldwide to manage their accounts receivable process. To find out more about how Xero can assist your business, speak to our Xero Gold Partner Team today.