This is a guest post by Craig Keolanui of SmBizWinningTips.
According to a recent survey, over 50% of small businesses find collecting payments and late-paying customers to be the most challenging aspects of managing their cash flow and payment activities. And particularly for businesses running on low margins, late payments can be a huge setback.
Late payments can cripple a small business with cash flow problems!
Late payments not only reduce your revenue, but they also have you paying for goods (components of a sale) or services (payroll) while waiting for payments to come in. If your sales are increasing, but late payments are also taking off, you will have a revenue shortfall when you start paying your bills.
If you are not completely on top of your books, this can sneak up on you right when things start getting consistently busy. The joy of increasing sales can quickly be extinguished by the angst of having to call for payments when it comes time to pay for supplies or payroll. You have to do whatever you can to encourage early payments while deterring late payments.
There are several steps to take to encourage early payments. Invoicing in a timely manner goes a long way, but you can also try:
- Invoicing twice a month. Some companies cut checks on certain dates and you might receive half of the usual monthly activity a little early. Keep this in mind also for accounts that are getting bigger or keeping more money tied up.
- Make sure to establish contact with accounting departments at any of the businesses with delinquent account activity and send them email reminders after mailing each statement.
- Encourage paying off invoices as opposed to waiting for monthly statements.
- Give a credit on the next statement for any early payment. You can also set up a rewards program or discount for companies that pay before 15 or 20 days.
- When setting up accounts, give some kind of one-time credit or discount for any accounts that are set up with purchase cards (credit cards!). Accepting them eats into your margin, but you set a firm hook and make it easier to process orders and get paid in full.
Discouraging late payments can also help speed things up. Here are some techniques to use:
- Charge the dreaded late fee. Make sure you spell things out and if you are just starting to establish late fees, be very specific about “invoice dates” vs. “statement dates”.
- Try calling clients who actually place orders to inform them of any issues getting payments out of accounting. Sometimes peer pressure will work better than any call you could make.
- Put up a list of delinquent accounts for staff members to act on if those customers place an order.
- Set yourself up to process electronic payments. Many of these customers can be steered that direction and you can start offering it to others.
Increased sales is a good thing, but making sure you get paid for your sales is critical to keeping the cash flowing and avoiding coming up short.
The age old adage that invoicing is boring is slowly replacing to the ‘fun thing that you do to get money on time’. Customer base is growing. Demands are at an all time high and you need to be on top of your business to stay ahead.
Previously it was enough to store customer data and create invoices from there. But now, when the ‘other guy’ (or gal) is doing a great job, you want to be nothing short of excellent. It’s advised from time immemorial to steer clear of factors that bind you to mediocrity and find avenues that lets you show off your skills better.
Imagine invoicing clients from a train! That’s what Mr Iwasaki does on a regular basis.
Mr Iwasaki is a part of the growing phenomenon called ‘freelancers’ whose definition of office is home and work is fun. They enjoy what they do and adopt those softwares which help them do what they love doing the best.
Zoho Invoice had come into his life at an opportune moment when he was looking for respite from Microsoft Excel. Customer information is the key to any organization and managing them efficiently is important.
Mr. Iwasaki says,
Such data is supposed to be relational database and I was forced to manage it by Excel which was not efficient.
We are no longer a part of closed economy. Why restrict us then, when freedom is just a few clicks away!
Read ahead to find out more about this talented entrepreneur who wears multiple hats at his company.
Peep into your Zoho Invoice or Zoho Books account and you’ll spot our
brand new addition, “Online Partial Payments”. Earlier, we had the option
to record partial payments manually for invoices, we’ve extended that further to
online payments as well.
Most often in businesses, by mutual
consent from both the seller and the buyer, the payment is accepted in
installments. If your business works this way, then you have some real
good news here. To keep up with your customers’ installment payments could be
rather difficult. With the introduction of partial payments, this issue would never resurface again.
Send an invoice out to the
customer, choose the option to let the customer make partial payments
for that invoice. As the customer pays, the amount due for the
invoice is deducted and closed eventually; when the customer pays up the
entire amount due for that invoice.
Get to know more about this feature from our help section.
Enjoy receiving payments, while we get back with another feature to rant about. Until then enjoy invoicing and accounting with us. Follow us on Twitter for quick updates.
When we launched Zoho Invoice last year it was one of the few affordable online invoicing services to support multiple currencies. However, there were some limitations and we have been pleasantly surprised by the number of users seeking improvements. This upgrade addresses these limitations to a large extent. So let’s quickly get down to the details:
Currency decimal places – It’s configurable!
Prior to the upgrade, irrespective of the currency in which you operate the amounts were rounded to two decimal places. This doesn’t go well with customers in a few countries. Let me give you an example of Japanese Yen (JPY) that does not have decimal places. Previously, when you raise an invoice totaling 100 Yen, the amount would appear as 100.00 in the invoice. Japanese customers tend to confuse 100.00 with 10000 Yen.
With this upgrade, you can configure the decimal places for JPY to 0 so that the .00 after 100 would no longer rear its ugly head. I am sure our friends in Japan will like this feature. We also hope our beloved customers in the Middle East and elsewhere who operate in currencies with 3 decimals will benefit.
Quantity Decimal Places - Precision Personified
Zoho Invoice now supports six decimals places for quantity on an invoice. All amounts in the invoice will be formatted to display up to the decimal places you have specified. If you are a telecommunication company who calculates customer calls in minutes to the 4th decimal or any other business not happy with the restriction of 2 decimals, you can try out Zoho Invoice now – the quantity decimal places should no longer be a deal breaker. With this, your invoices should look more accurate and better.
Invoice Creation – Service/Item Prices in Foreign Currency
We have also made changes to the way the item prices are shown while creating/editing invoices in foreign currency. Henceforth, if the invoice currency is different from your base currency item prices will be displayed in the invoice currency even while creating/editing the invoice. Previously, while creating invoices the item price were shown in base currency even though while viewing or sending the invoice they get converted to the invoice(foreign) currency. The amounts in invoice currency are calculated based on the exchange rate that you enter.
This upgrade lays the foundation for more exciting things to come from Zoho Invoice. We are in the midst of a hot Indian summer and one way to beat the heat is by delivering some cool stuff for our customers. Stay tuned.