5 Proactive Ways to Make Sure You Get Paid

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5 Proactive Ways to Make Sure You Get Paid

By Anna MaskerIn standard12th November, 2015

Cash flow:  it’s the biggest issue most businesses face. It is a huge distraction driven by the unpredictability of the timing of customer payments.

Collecting open receivables can be a full time job for some companies depending on the complexity of their invoicing and their customer payment methods and terms.  Unfortunately, many of our clients wait until the invoice is past due to start addressing collections.

In reality, the collections process should begin BEFORE the first invoice goes out the door.

An ounce of prevention is worth a pound of cure they say… the same applies to accounts receivable.  If you do the upfront work you will avoid many follow up phone calls, emails, cash crunches and headaches in the future.

Here are our top 5 proactive ways to make sure you get paid: 

  1. Have a formal onboarding process for clients and document their billing procedures: This is probably the best preventative measure for avoiding past due receivables and can reduce collection issues by 75% if you do this at the time of contract.  At a minimum you should know:
    • How they want their invoices submitted (email, mail, electronically)
    • What is the approval process
    • To whom the invoices should be sent (e.g. buyer, AP department, accounting)
    • In what format (PDF, entered electronically)
    • When
    • Terms
  2. Make sure your invoices meet the specs: When an invoice goes out the door, you want to make sure it will sail smoothly through your clients’ AP department.  If a PO # is missing, the invoice doesn’t meet a client’s format, or it doesn’t get put in their Vendor Management system a certain way, you won’t know there is a problem until the invoice starts aging out.  Often times with large companies, no one will contact you—it will just be rejected by the AP clerk or system and sit on someone’s desk for follow up (if that).
  3. Make sure invoices make it to the destination. In our digital age, emailed invoices are an efficient way to get our bill to the client instantaneously but it can also be a big black hole.  If you have the wrong email address, it goes to Junk mail, or it gets buried in someone’s inbox, your invoice could be in never-never land for some time before it gets addressed.  In many larger companies, the payment terms begin when the invoice is properly received in their system.  So if it never got to the destination in the first place you may be adding 30 or more days to your payment cycle. Sometimes a follow up call to the client to make sure they received your invoices is important, especially in the first few billing cycles.
  4. Get your invoices out on time. Seems like a no-brainer, right?  But complex invoices can take time to pull together, especially if you are waiting for vendor bills to pass through to your clients.  When invoices go out 10-15-20 days after the close you are granting your customers an extra 10-15-20 days of time to pay.  Invoicing should be a state of continuous improvement.  Relook at your invoicing process to determine if there are ways to streamline the process or accrue for expenses so you can get the invoices out the door
  5. Beware of Vendor Management Systems (VMS): If you deal with large companies or the government, beware of how you enter information into their systems.  While VMSs make your client’s lives easier by standardizing how AP is entered and routing bills for approval, each system is anything but standard when you have to work with them.  Make sure you understand HOW your invoice should be entered, on what line and with what specs so that it makes it in to the system so your bill can get routed for approval.  Some systems will reject invoices not entered correctly and notify you, others do not.

Collecting payments from customers can be a big headache, administratively burdensome and sometimes costly.  Taking a step back and implementing some proactive measures will have an immediate impact on collection efforts.

What proactive measures do you take to make sure you get paid?

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