Ryan Born is Founder & CEO of AudioMicro (http://www.audiomicro.com/). In this video he discusses managing accounts receivables for new businesses.
- Always send the customer an invoice at the time of sale
- Send a follow-up in a regular manner
- 30 days: 2nd notice 60/90 days: final notice
- After a final notice involve a collection agency
As a business owner and a CPA, a lot of folks as me how do I manage my accounts receivable? And, they usually don't even use that term. They really say how do I get paid by my customers, the accounting erm being accounts receivable. Well, here are some tips.
It sounds so simple but first off, make sure you send an invoice to every single customer at the time of sale. Invoice is a piece of paper that tells them here's the amount that's owed and here's what services or products were delivered.
Secondly, make sure that you follow up on your unpaid invoices in a very regular manner. For instance at 30 days late, you might wanna send them a second notice which is simply the same invoice, stamp, second notice telling them they're late.
Another regular interval to follow up on would be 60 or 90 days. If they still haven't paid you're gonna wana send them a final notice. Final notice typically means the next time you're hearing from me it'll be from a collections agency. And, that unfortunately is the finally step if you haven't gotten paid and you sent your first, your second, your final notices to folks. Hand them over to collections agency, help recover those receivables.
Make sure as a small business owner you stay on top of your receivables because that cash flow is the life blood of your organization.