There are many steps that go into finalizing the sale of a product or service; there is pricing, then quote creation, negotiation, approvals, and contract and order management. Once all of the work is done to complete each of those steps, the sale is complete… at least as far as your sales team is concerned. But what about the rest of the process? What about the part where you actually get paid?
Once the order is made, an invoice must be sent and payment must be collected; otherwise it’s like the sale never actually happened. It sounds simple enough, but the final two steps of the quote to cash process, invoicing and collection, are where many fall short of the completing the cycle. Below are a few tips to help you work through the final steps to quickly complete the quote to cash process.
DO AWAY WITH CLUMSY INVOICING
Trouble with invoicing is one of the top reasons companies struggle to quickly collect invoices and close the cycle. Many end up sending incomplete or incorrect invoices and/or take far too long to actually create and send the invoice to their customers. The result of such clumsy invoicing practices create barriers to payment and give customer little time to process payment within the agreed upon terms. In fact, a recent industry study found that 46% of invoices are paid late because of these administrative errors- not because of a customer’s inability to pay.
FIND THE TIME TO FOLLOW UP
Many companies have a hard time keeping up with accounts receivable communications, one of the biggest factors in quickly closing the quote to cash cycle. Best practices in accounts receivable management say you should always follow up with customers to ensure they have received the invoice and understand what is expected of them, send reminder letters as invoices approach their due date, and continue to notify customers of outstanding balances as the invoice becomes past due. Sticking to strict communications schedules helps forgetful customers and provides customers with multiple opportunities to bring up and questions or concerns that might be delaying their payment. These communications can be time consuming, especially if you do not have a large A/R staff; but these communications have been a proven way to speed up the quote to cash cycle, increase cash flow, and reduce the time between sending and invoice and getting paid.
KEEP AN EYE ON YOUR INVOICES
Your company uses marketing tools to track the progress, success, and failure of marketing campaigns; and sales uses CRM to track leads, prospects, and opportunities. What about your accounts receivable team? Once the invoice goes out to the customer, they have no way to track the progress of the invoice or the steps being taken to collect it; they’re in the dark. All of that information is usually hiding in someone’s email account which does nothing for the teams as whole. By using accounts receivable management software to track and manage your invoices, anyone with access to the system will know exactly what is going on with an invoice and what steps need to be taken to collect it. Additionally, the program will allow you to track the success and failure of your internal processes so you can tweak them for optimal results.
Don’t leave cash on the table, use a specialized system like Lockstep Collect that can help you deal with the problems mentioned above and start closing the quote-to-cash cycle significantly faster. Watch this short video to see how automated accounts receivable management can help you quickly send accurate invoices, automate invoice reminders and follow-up communications, alert collections to actions that must be taken, and much more.
