Business Accounting: Managing Receivables More Efficiently
For many new entrepreneurs, business accounting is handled in-house. Whether the business owner is wearing multiple hats to keep lower expenses, or the company has hired someone to manage the books, business accounting is an extremely involved process. Fortunately, there are a few tricks which can help business accounting run more efficiently, and guarantee a steady cash flow in the process.
Getting A Deposit On Orders
It may sound strange, but getting a deposit on orders over a certain amount can actually help business accounting go more smoothly. When customers usually place orders, they will wait until the end of the aging period on the invoice to remit payments. By getting a deposit, business accounting can keep better track of what is owed on each open account, while simultaneously ensuring some revenue is coming into the business. Deposits on orders, at the very least, cover the cost of production and operations. Additionally, customers are more likely to pay off the balance on invoices if they already have “skin in the game.”
Late Fees On Overdue Invoices
Late fees are a sensitive subject when it comes to managing receivables. Many business owners feel charging late fees will not only drive away customers, but also create more of a hassle on the business accounting side of operations. First, late fees do not drive away business, because most creditworthy customers pay on or before the due date of the invoice. Second, late fees actually encourage customers to pay early, or at least promptly, once once the penalties are triggered. Late fees help business accounting, not because of of all the revenue made from customers who miss their due dates, but because they act as an incentive to ensure steady payments. Keep in mind, if your business is going to charge late fees, the rule must be stated clearly before a purchase is made, and on the invoice itself.
Invoice factoring streamlines accounting by completely eliminating the need for payment schedules and late fees. When using invoice factoring, open customer accounts are converted to revenue within 24 hours. Factoring is a method of automating an aspect of business accounting which gets rid of the need to track payments and hound customers who are nearing the end of the aging period.
Streamline Your Business Accounting Today
BG Capital Funding Group offers a wide range of accounts receivable financing programs to help automate business accounting and ensure a healthy cash flow without taking on unnecessary debt. Contact our offices today to learn more.