If your DSOs are too high, take a look at your AR processes to see what can be done to increase on-time payments. After an order ships, the order to cash process (OTC) in AR begins with invoicing. There are a number of things that can go wrong with invoicing that can delay the OTC process and keep you from being paid on-time.
Here are 7 tips for ensuring you receive payment on-time.
Some companies that create invoices manually batch invoicing or only invoice periodically to balance their workload. Invoicing should be done ASAP. Delays in invoicing can increase billing errors, and make it difficult for customers to process payment on-time. With electronic invoicing you can automatically generate invoices as shipments occur.
Avoid Invoice Errors
Manual invoicing is prone to errors that can delay payment processing and annoy customers. Invoice templates can help reduce the opportunity for errors, but the ideal solution is to automate invoicing. Electronic invoicing automatically draws information from and updates data files so errors are avoided.
Payment Terms Should be Easy to Read and Understand
Payment terms that are hard to find on an invoice, and difficult to understand can create confusion and errors delaying payments. Payment terms should be in a prominent location on your invoice, in bold print in a highlighted box. Keep your terms simple so they are easy to understand.
Offer all Forms of Payment
Make it easy for customers to pay you by offering all forms of payment – electronic and paper checks. Electronic payment options should include ACH, credit cards, and fintech payment processors such as PayPal. With electronic invoicing you can include a hyperlink to facilitate electronic payments, and offer an online portal for customers to self-manage their accounts and payments.
Early Customer Contact
For large invoices, consider contacting customers early to make sure the invoice was received, there are no errors or questions, and it is scheduled for payment. With AR automation you can schedule automated reminders to your team and the customer.
Late Invoice Follow-Up
Be diligent about late invoice follow up. Customers will pay sooner if they know you mean business.
Automated invoicing saves time, reduces errors, facilitates electronic payment, updates financial and ERP software, and enhances customer experience.
Your on-time payments will increase with prompt and accurate invoicing that contains all the information the customer needs to process payment. Invoice automation can make this process more efficient and reduce DSOs.
Accounts receivable and accounts payable cloud-based solutions with customer/vendor portals and digital processes keep vendors and customers connected whether they work remotely or not.
With a connected accounting solution for your accounts receivable and accounts payable teams to coordinate work with customers and vendors, you can go digital and enjoy the benefits of office automation.
Lockstep Collect, a leader in cloud-based connected accounting solutions, can help you boost productivity and optimize cash flow with:
- Automated Communications
- Customer Self-service
- Collections Activity Management
- Reporting & Forecasting
Lockstep Collect is an experienced software partner that can help you increase efficiency and accelerate cash flow.
If you would like to learn more about how you can benefit from connected accounting solutions, please contact Lockstep Collect at www.lockstep.io.