Accounting is an essential component of every business, yet it is an area I normally don't delve in. With my love affair with software, it's about time to start investigating and writing about using online accounting software. Why? It's revolutionised the accounting industry, as well as given power and significant benefit to every single business that uses it.
I have started using Xero for my business so I will share the tips and tricks I learn over time with you. What prompted today's column is a startling statistic I came across from Xero.
'Trend analysis of Xero's small business customers in New Zealand from 2011 to 2014 shows accounts receivable is on average more than 30 per cent lower in January than the 12 month average'.
With Christmas just six weeks away, are you prepared for lower than normal cash flow? And if not - what can do you about it?
Here are five tips to get money owing you in faster during the normal summer slowdown. As well as for the rest of the year.
1. Reconcile daily
Matthew Biddick, Robert Purchas & Assoc is so right when he told me over the phone 'Knowledge is power'. The more you reconcile your bank statements, the clearer your picture is of whom and what is still outstanding. Xero has daily reconciliations with smart allocations making it easy.'
2. Invoice immediately and email your invoices.
It's totally acceptable to email invoices. I've been doing it for years. Invoicing immediately should go without saying. Depending on your business, you can give your staff access and reduced administration rights to segments of Xero online. For example this is marvellous for anyone in trades. With a tablet (and broadband) in hand, while still in the driveway of the customer after completing the work, they can log on create an invoice and email it then and there.
Accountant Peter McCarroll said that the 'Customer portal is a great feature for Xero's customer's customers. When you send your customer an invoice from Xero, it includes a link. When your customer clicks it, it brings them to a list of all their invoice activity. They can make immediate payment online in any mode that you have set up - paypal, credit card, online banking.'
3. Write detailed descriptions on your invoices
Of course this helps eliminate delays from questions. Adam Haining, goes one step further beforehand to help gain the sale. 'We use Quote Roller. It is a cloud based quoting program that integrates with Xero and enables us to provide a quote/proposal with lots of information/photos on the products and services we are offering that client. It is much better than a single page with a list of services and the cost.'
4. Set your own payment terms
If it's not written down, how would your client know it's due immediately and not in two weeks or month?
5. Have someone else call your debtors
Give them a script. They can be more dispassionate than you. Peter McCarrol has clients that use debt chasing software like Debtor Daddy. These services send automatic reminders to your customers that their invoices are almost due through to past due. You set your message text, timing and frequency.