For a number of years I was the accounting manager for a multi million, multi location corporation where one of my main functions was to oversee the accounts payable processing. We paid thousands of bills per month and had many small business vendors.
I would get calls from vendors trying to find out why their bills were not being paid, they were frustrated, they were angry. Over and over again, after researching with the AP team, there were recurring issues from these vendors that prevented us from paying them timely. It was not because the company did not want to pay them or did not have the cash to pay them.
Actually, most customers want to pay you on time, but they won’t if there are problems with the invoice.
- Invoices are missing critical information such as mailing address, telephone number, purchase order number, etc
- Invoice does not have ‘terms’ such as due on receipt, Net 10, Net 30
- Invoice is sent in too late –past their payable cycle
- No flexibility in payment methods –checks, credit cards, PayPal, etc
The fact is that poor AR practices cause a number of issues for businesses. From extending credit to unqualified customers to failing to follow up with past-due accounts in a timely manner, poor AR practices suck time, money and productivity from a business. The worst part of all is that many of the problems are easily avoidable.
Now that we manage the books for many small business, when they first start working with us we quickly identify the AR issues and work with our clients to rectify and improve the processes that insures a positive cash flow for their business.