I used to work in a small office where the Controller, Jeff, was the sole member of the accounting department. The company nearly shut down every time Jeff took a vacation. Nobody else had access to the desktop accounting software. We couldn’t issue any invoices until Jeff returned and he’d leave a few blank checks with the owner of the company in case of emergency. Anything else would have to wait until he got back.
That’s a far cry from how I run my own business today. Last week, I attended a three-day conference in Kansas City and my clients weren’t even aware I was out of town. I use a number of cloud-based programs accessible from my mobile phone, laptop, and tablet, so I’m able to work, respond to emails and send invoices as needed… despite being away from the office.
That ability to send invoices anytime, anywhere is crucial to running my business. As most small business owners can attest, collecting client payments promptly is what keeps your business (and your personal life) running. If your clients don’t pay, you’ll have trouble paying your own bills. Nobody wants to find themselves in that situation.
Here’s how cloud accounting can help you get paid faster.
Invoicing is the core of any business’ accounting. You need invoicing to correctly track your revenue and manage how much clients owe you. However, manually preparing invoices can lead to mistakes, which quickly leads to incorrect financials and perhaps even unhappy clients.
Cloud accounting platforms can help you automate invoicing, making it easy, uniform and accurate. As soon as a job is complete, you can email your invoice right away, easily including any chargeable hours or expenses.
The invoice is sent to your client via email instantly, versus taking several days through the mail. The sooner your client receives your invoice, the faster you can get paid!
Do you invoice clients on a subscription basis? Cloud accounting programs make it possible to send recurring invoices automatically. Just set it up a recurring invoice for your client once, set the day you want your invoice sent and how often you want to send it. The software will automatically send the client their invoice on a weekly, monthly, quarterly or annual basis.
Right now, do you know how many clients owe you money?
If you rely on disconnected, manual systems to invoice clients and monitor receivables, it might take quite a bit of your valuable time to reconcile your paperwork. If you use cloud accounting software, chances are you can simply glance at your dashboard to see the total outstanding and whether any invoices are more than 30, 60, or 90 days old.
That level of visibility makes it easy to follow up when invoices are due, and consistency is key when it comes to collecting accounts receivable.
If you don’t stay on top of unpaying clients, they won’t take you seriously. Your invoice may state that payment is due within 30 days, but if you don’t follow up on late payments until they’re 60 or 90 days old, your clients will follow the implied due date of 60 to 90 days.
However, if you consistently remind them of upcoming deadlines and reach out to them as soon as an invoice becomes past due, they’ll know to take your stated due date seriously in the future.
Do your clients need a little more encouragement to pay you on time? You may want to consider charging late fees on past-due invoices. Cloud accounting allows you to automatically charge a percentage or flat late fee to invoices that age past a certain deadline. For some chronically late clients, this is just the incentive they need to pay promptly.
How much time do you give your clients to pay you? Many small businesses offer 30 days to pay, but this is changing. Long payment terms are a relic from the days when companies mailed paper invoices. The invoice would take a few days to reach the client’s mailbox. The client would take a week or two to process the invoice and issue a check, then mail that check back in a return envelope.
Today, most businesses send invoices online, and payments are electronic. There’s really no need for 30-day payment terms. You hustle to get work done on time, why should you wait an entire month to get paid for it?
Electronic invoicing also makes it easy for your client to pay their invoices by allowing you to accept several forms of payment: PayPal, Stripe, credit or debit card, bank transfers, and e-checks. By offering a variety of solutions, you can please your clients as they can choose the option that is easiest for them.
Clients can simply click a link to pay your invoice in full. There’s no returning invoice stubs or writing invoice or account numbers on checks and hoping they get applied correctly. Clients pay directly through your cloud accounting platform, so it’s easier to keep track of what has paid and what hasn’t. Payments coming in are automatically identified according to the customer and invoice number.
Do you have employees and contractors working for you? Cloud accounting software allows you to give them permission to issue invoices as soon as they complete a project. This eliminates the need for you to sit down and slog through bills every month.
You can also set up individual billing rates for each employee or contractor, making it even simpler to track and bill for their time.
I use a number of cloud-based programs accessible from my mobile phone, laptop, and tablet, so I’m able to work, respond to emails and send invoices as needed… despite being away from the office.
Remember my old Controller, Jeff? When Jeff was out of the office, he had no access to the company’s desktop accounting software. Work piled up while he was gone because nobody else had access to the software or knew how to issue an invoice.
Imagine if cloud accounting had been available then. Jeff could log in from his beach house or the ski lodge to review expense reports, approve payroll, or email an invoice. As long as he had internet access, he could access the software from his phone, tablet, or laptop. If Jeff really wanted to disconnect, he could give selected staff permission to create invoices or expenses.
For many small business owners, dealing with getting paid is one of the toughest parts of running their business. To speed up the time from invoice to cash in the bank, you need to invoice accurately, send payment reminders, and make it easy for clients to pay you quickly. Cloud accounting helps you get the right technology and processes in place not just to get paid on time, but get paid faster.