Make AR the Key to Securing Your Financial Future
What’s the key to sustaining your healthy cash flow? It’s all about keeping a tight leash on Accounts Receivable processes; making sure you get paid on time and keeping those waiting periods short. Here are our practical best practices to set clear rules, use tech to your advantage, and keep an eye on how things are going:
You Have to Ask: Invoices don’t send themselves. Set clear workflows and expectations so you can seamlessly move from contract to invoicing without dropping the ball.
Play Good Cop Bad Cop: While they may have the best relationship, don’t make your program team ask for money. We guarantee they’ll be uncomfortable and may not even properly ask. It’s not their fault: financial conversations can often be awkward – especially when a payment is late. Your program team is doing good work, so let them be the “good cop” and don’t make them chase a payment. If there’s a snag, they may be able to help point the way, but your AR team should be willing and able to make the call.
Set Clear Payment Terms from the Get-Go: Be upfront about payment terms with your partners. It’s like setting the rules of the game before it starts, avoiding confusion and late payments.
The Squeaky Wheel…: Almost every accounting software has an auto-reminder function to re-send unpaid invoices on a set cadence. It may take a bit of initial legwork, but it’s your best path to a speedy collection.
Finally, Sometimes It’s Just a Game of Hot Potato: The unspoken reason for a late payment? Sorry to say, but it’s likely an administrative lapse from your own doing. Did you miss a form, or a signature, or original receipts? The organizations that get paid fastest are the ones that don’t hold the administrative hot potato. And the more complex the funding stream (i.e., municipality payments) the more potatoes you’ll have. Be sure to specially train your AR team if your revenue is complex; sometimes you’ll be best served by outsourcing this function. Create a central way to collect correspondence and track payments (whether it’s in your accounting system or in a spreadsheet) so the whole team can check on status.
The goal: a smooth, predictable process. Be crystal clear about when you expect to get paid. When you get your invoices out without a hitch, it lets your program folks focus on their strengths. You’ll be on your way to ensuring a smooth financial journey and consistent cash flow.