A/R: It's Also Good to Receive
Needless to say, in business receiving is not just good, it's imperative!
The money you should be getting from your clients for services or products, known in the accounting world as Accounts Receivable (A/R), is the lifeblood of your business. Keeping an eye on what's coming in, what's supposed to be coming in, and what isn't coming in is important to the success of your business.
HOW DO YOU GET YOUR MONEY?
One key to getting money in the door is to make it as easy as you can for your customers to pay you. Offer multiple options for payment: do you accept checks, cash, credit cards? The latter requires setting up a merchant account through your bank or a third party provider.
You can also create accounts with online services like PayPal to provide your customers even more options for sending their money to you.
TERMS OF PAYMENT
It's important to be clear upfront about your payment terms. While retail transactions are usually fairly straightforward ⎯ they pay, you deliver ⎯ if you offer credit or are paid after goods or services are delivered, make sure your customers understand when payment is due.
It's a good idea to keep your terms modest, even as short as 7 or 10 days, at least at first. This gives you time to build a financial relationship before you put too much at risk. Your terms of payment should also be clearly spelled out on each invoice you send.
COMMUNICATION IS CRITICAL
After you send out those invoices, consistent routine maintenance and follow up are key: you have to make sure that you keep that money coming in.
As Jason Stine of CRF Solutions, a California-based collections agency, pointed out, "More non-payment errors develop in the first 60 days after delivery due to insufficient or incomplete customer contact." Start by double-checking with your customers to confirm they received the invoice, then follow up on a regular basis.
Communication not only ensures that no easily remedied snafus derail your relationship with a client, it also provices a touchpoint for you to reach out and make sure your customer was satisfied, and show that you care.
Some helpful links for A/R newbies: