Nine Ways to Improve Your Accounts Receivable Turnover 

Accounts receivableturnover measures the speed with which the company turns its debtors into cash. The higher the ratio, the more the availability of money with the company. It allows businesses to reduce their bad debts and improve the company’s financial health. On the other hand, a low ratio signifies poor credit control policies, haphazard customer collection policies, etc. If you wish to improve this ratio, try to practice the following points: 

  • Maintain strong relations with clients: 

Keeping your customers happy is the ultimate goal for every business. Checking in with them from time to time and doing other small gestures like phones or e-mails help in building strong relations and collecting timely payments from them.  

  • Send invoices on time: 

If you send invoices to your customers a month after selling them the goods, it will make them insensitive and delay accounts receivable. Therefore, you need to be quick in creating and sending the invoices to your customers and prompting them to pay as soon as possible.  

  • Clarify the payment terms and conditions: 

Include your payments terms and conditions in the invoice itself to ensure the success of your accounts receivable. Specify the time limit within which you expect to receive the payment. Offer discounts for early payments, and do not be afraid of imposing penalties for late dues. Set your credit limits for products or services that are expensive.  

  • Choose a cloud-based software: 

Cloud-based accounting software enables you to handle your accounts receivablefrom anywhere at any time. You can access your information in real-time. Also, the software has numerous time and expense tracking features and provides seamless integrations. There are analytical tools to automate recurring invoices and track cash flow.  

  • Offer multiple payment options: 

One way to prompt payments from your debtors is by accepting them from multiple sources. Allow your customers to pay in cash, cheques, electronic fund transfers, credit, or debit cards. Employ online payment gateways to make this process quick and efficient.  

  • Minimize your receivables altogether: 

One way to manage your accounts receivableis to do away with it altogether. Try to get pre-payments and minimize giving credit to the customers. Commission fees charged upfront might seem costly, but it is a viable solution.  

  • Reduce the steps in your billing structure: 

Another way to improve your accounts receivableprocess is by simplifying the billing structure. If you are a service provider, you can charge a fixed amount periodically that can be automatically debited from your client’s accounts on the due date. It minimizes the management of recurring invoices and errors.  

  • Follow up with clients: 

After sending the invoice to the customers, do not just forget it. Instead, follow up with them near the due date to ensure you do not miss any payment.  

  • Conduct reconciliation: 

Reconciliation is significant in the company’s accounts receivable. It will help you identify discrepancies and correct them early. 

Outsource accounts receivable, accounts payable, payroll management services and other accounting & bookkeeping services today and streamline your business finance.