When it comes to business, cash is king. That’s why it’s so important that you collect the money you’re owed as quickly as possible. The faster you can collect cash, the faster you can reinvest it. The faster you reinvest, the more your business can grow.
Collections start with a basic accounting ratio called days sales outstanding or DSO. Don’t let words like accounting ratio or acronyms like DSO scare you off. DSO is simply the number of days it takes you to collect what’s due you. The sooner you collect (the lower your DSO), the healthier your business is financially. The key is to identify what you can do to reduce the time it takes you to collect. Fortunately, there are some simple things you can do to speed the process. We’ve identified four steps you can implement to improve your payment and collection processes. For steps 2-4, we’ve identified applications available from the QuickBooks ecosystem and Apps.com that were designed to improve the task even more.
1. Bill timely – The first step to speeding your collection process may seem obvious – bill your customers. Right away. Yet, it’s surprising how often billing is put off. That’s because most business owners wear several hats – from designer, to manufacturer to salesperson to service provider. And the hat they typically like the least is bookkeeper. But the longer it takes to get your bills out, the more likely it is that payment will be delayed or worse – ignored.
One of the common challenges with invoicing is that it’s often a manual process. If you’re using QuickBooks Online, you’ve eliminated that issue. You can quickly customize and create professional looking invoices and email them immediately. That’s the first step – getting them out. Then, you wait for the check to come through.
2. Make it easy to pay – Don’t wait for a cheque. Although cash is king, most customers like the convenience of paying with a credit card. Speed up collection by giving customers what they want. QuickBooks Online Payments makes it easy for your customers to pay by credit card. When the invoice arrives via email, your customer simply clicks on a link to access a secure site and submits payment by card. Your books get updated automatically, the customer receives confirmation of payment, and you can get on with business.
3. Reduce time on accounts receivable processes – Most business owners want to spend their time developing products or improving their services. When you can save time on bookkeeping and spend more on your business that’s a good thing. One way to reduce time is to cut manual entry, that’s where Sync with Square (now available in Canada!) comes into play.
Sync with Square securely downloads your Square sales data into QuickBooks Online on a daily basis. No more manual data entry at the close of a busy sales day. Deposits are automatically matched against your bank statement, while sales data is correctly imported into QuickBooks Online, and tax codes automatically detected for speedy reconciliation.
4. Stay on top of outstanding payments – It’s safe to assume that most customers plan to pay you, but sometimes they simply overlook the invoice or forget it. How you handle the follow up can make a difference in how quickly the client pays in the future and in how well your relationship builds. Two popular apps on Apps.com that help automate this process and help you get paid faster are InvoiceSherpa and ARCollect.
InvoiceSherpa lets you customize and send out reminders before and after invoices are due. You set the frequency for how often they are sent and automatically follow up with a thank you once payment is submitted. Customers can make a payment right from the reminder email. InvoiceSherpa automatically picks up new invoices as they’re created in QuickBooks Online, so it’s virtually impossible to forget or miss outstanding invoices.
ARCollect helps you manage your collection activities directly from your QuickBooks Online AR aging summary. You can email, make notes, save Promises to Pay, assign reasons for non-payment, and track every unpaid invoice until it is paid. Create customized reminder templates and send a thank you once payment is received automatically. In addition, you can generate accurate cash flow forecasts based on customer commitments to pay.
Automating your bookkeeping and billing processes with a solution like QuickBooks Online can save you time. But as you can see, even the best accounting applications get better when paired with add-ons that are designed to improve specific tasks. We’ve identified just a few that help with the receivables processes, but there are many more in Apps.com. Take a moment and see what else you can do even better.