Back in the day, it was perfectly normal for a small business owner to invoice for services rendered at the end of the month. Typical payment terms were 30 days and, with potential check clearance times, you were looking at up to 60 days between invoicing and payment.
And that’s assuming things went smoothly. If there was a mistake on the invoice or accounts payable lost track of it or the check got lost in the mail, the business owner would need to spend precious time and energy looking into delays, resolving them and, once again, waiting for the check to arrive in the mail.
We don’t live in those days anymore.
The world is a faster, more efficient place. Technology has made simple transactions easier than ever. And that extends to your business’s accounting function. Cloud applications have become game changers when it comes to getting paid faster, improving cash flow, having a good sense of where your business stands at all times, reducing paperwork and providing a better experience for your customers.
Most importantly, here’s how cloud accounting can get you paid dramatically faster.
Accept Online Payments
How do you pay your personal bills and business suppliers? Probably not by check, right? So why are you still accepting that form of payment for the work you do? Credit, debit, Apple Pay, Google Pay, WePay, e-transfer and PayPal are just some of the common ways businesses get paid faster. In fact, according to FreshBooks research, you’ll get paid twice as fast when you accept online payments!
And let’s face it: clients expect to be able to pay easily with credit cards or using payment gateways. After all, they have choices everywhere else they do financial transactions. It’s good for your image to offer convenience instead of throwing them back to checkbook days.
Do you have clients on retainer – or do you bill some customers the same amount every month? (Congratulations!) You can save yourself some time by setting up automatic payments in your billing software and the system will take care of it without you having to lift a finger.
Want to improve your cash flow? Consider switching monthly billing to bi-weekly. And shorten those payment terms to 15 days.
Late Payment Reminders and Late Fees
Every business runs into truant clients from time to time. The invoice got lost in their inbox or on their desk. They don’t have a record of receiving it. They simply forgot about it. Whatever the excuse, you’re not getting paid when you should be.
Make your life easier and cut down on an awkward follow-up conversation by setting up late payment reminders in your cloud accounting software. Pre-select how often you want a late-paying client to be reminded, fill in the template and, voila! They’ll automatically get an email while you’re getting on with running your business. And if you’ve got chronically late payers, you can motivate them to pay on time by building late fees directly into your invoice.
Do you set aside time once a month to handle your invoicing and other accounting tasks? If you’re like most small business owners, that time can easily be swallowed up by more pressing project work. When you’re on the cloud, you can take care of accounting chores in small bursts, from anywhere.
Most cloud solutions also offer a mobile app that allows you to do your bookkeeping on your phone or tablet. You can whip up an invoice in minutes as soon as you’ve finished the job – from the bus, the parking lot or the pub or coffee shop where you’re rewarding yourself for work well done!
Broaden Your Clients
Many small business owners stick to doing business with people in their communities, or at least their own countries. Even if the type of work you do can be done remotely for anyone, who wants to deal with unfamiliar sales tax and currency?
When you use cloud accounting, all of the headaches associated with out-of-country clients is managed for you. Simply invoice like you normally would, enter the currency and all the right information will be automatically formatted for you.
There’s a certain comfort in using the same old accounting software (or Word/Excel) that you’re used to. But the advantages of using more advanced cloud technology are clear. Along with simple business practice changes, like decreasing your payment terms from 30 days to 15 days and invoicing more regularly, you’ll see a drastic improvement in your business’s cash flow. Plus, you can hand off some of the more boring and time-consuming administrative tasks to your trusty accounting system. And your records will always be up to date, so tax time will be a cinch.
Welcome to the present – and the future!
Want more ideas? Here are 10 quick tips for getting paid faster.
This guest post was written by Heather Hudson of FreshBooks for Fundbox. FreshBooks makes invoicing and accounting painless for millions of small business owners.