How important is it to ensure that you stay on top of your accounts?
SO IMPORTANT, that it should be a regular weekly exercise for your business.
But how do you incorporate this into your weekly schedule and be motivated to be in control of this area of your business?
INVOICING YOUR CLIENTS
- Use a tool which allows you to keep a track of your hours. There are plenty available to suit your business needs and can be free depending on your requirements.
- Create folders for storing your expenses which may need to be also be invoiced to a client so that they are handy when you are invoicing.
- Create a standard invoice template through your accounting package so that you will always keep invoices consistent and within your system.
- Set aside a time each week (perhaps Friday afternoons at a certain time) to do your invoices.
- Have email addresses set up and set up a standard text to say on each invoice email you send out.
- Make sure you print a copy of your invoice and clip into a folder of Unpaid invoices.
- When you receive a payment via EFT, cheque, cash, credit card or Paypal, mark as paid not only on your paper invoice but also in your accounting system.
- Move paper invoice from an Unpaid folder to a Paid Invoices folder.
This a job which every business owner dislikes but is such an important element to enable you to grow your business.
So, what steps can you take to make this an easier job?
- If your terms are payment within 7 days, allow 7 days before following up.
- Create a standard email template to send out to your clients say 10 days after the invoice had been sent, polite and including a copy of the invoice.
- Allow another 3 days after that email to follow up with a phone call to see if emails have been received and ask if they can provide a payment date.
- Monitor that date. If not received, then send a further email which outlines what your next step will be if unfortunately payment is not received.
- After 1 month of not receiving any funds or any explanation, then send a final letter of demand in the mail before perhaps handing over to a debt collection agency.
- This is hard for any business owner to do, but if you have received no explanation as to why funds are not forthcoming, this can be a prompter to your client to pay.
Remember, always remain polite and courteous as there may be a perfectly business like reason for non-payment and you want to maintain a professional approach in all aspects of your business.
The biggest issues that small businesses have with their accounts are getting their invoices out and following up debtors.
However, another big aspect is to keep on top of entering expenses of the business as well and ensuring that you pay your suppliers.
The best way to overcome getting behind in your regular accounting is:
(a) set up folders : Accounts Payable, Bank Statements, BAS Statements, Receipts.
(b) set aside time to enter all of your accounts – even fortnightly is fine for this.
(c) file everything.
If you can stay on top of every aspect of your accounts, even if it means outsourcing the data entry to a bookkeeper and BAS to a BAS Agent or your Accountant, then you will always be able to provide accurate financial reports, know your current cashflow position and produce budgets for the upcoming year/s.
Hazel Theocharous, Expert VA, Assisting U Virtually assisting businesses to stay on top of their admin enabling them to grow their business.