With clients busy with the holidays or taking time off, now is the time to get a handle on your finances and make sure you get paid before 2015 comes to an end. Most customers, whether they’re companies or consumers, will appreciate your efforts to get organized, especially if your efforts push them to get organized on their end, too. Try these tips to get a grip.
Get a Bird’s-Eye View of Your Business’ Financial Situation
Even if you’re a financial whiz, you should make an appointment with your CPA or accountant and go over your books. Figure out what areas need more detail or where you need to keep better records in order to get a clearer snapshot of how your business is doing.
For example, do you need to add more details about transactions or expenses? Are your business credit card statements not synced with your accounting statements? Tapping into the advice of a professional who helps small businesses every day is likely to be more fruitful than trying to come up with a to-do list yourself.
Use Software to Keep Track
Chances are you’ve fallen behind on entering all your financial information into your accounting system and are starting to panic about your procrastination. To get and stay organized, using financial tools, such as QuickBooks, to manage and track your business’ financial status is crucial.
Look for financial software that has a multi-user function and allows you to store your information securely in the cloud, which can help get everyone on the same page. If you have employees who help keep your finances organized, be sure you know when those people have time off for the holidays so you aren’t scrambling for help at the last minute.
Get Paid on Time
Closely monitoring receivables is the best way to get paid on time. Look for an accounting software tool that tracks customers’ invoices and due dates so all you need to do is get in the habit of checking it. Better yet, set up your system to let you know when customer payments are late so the information comes directly into your inbox. If you have customers that have made a habit of paying late, setup an invoice template that includes details about penalties for late payments. Even small penalties work wonders to entice customers to pay on time.
Because some customers will prefer to pay you by direct deposit, PayPal or ACH, have your business bank notify you when a deposit has been made so you can enter the information into your accounting system. Or simply link up your business banking to your accounting system to take some of the load off you.
Track Customer Interactions
You can use customer relationship management (CRM) or contact management software to take detailed notes when talking to customers about overdue invoices. This ensures you aren’t repeating yourself (and offending anyone). Plus, knowing if a customer has already responded eliminates time wasted in following up more than once.
Resolve the Cause(s) of Late Payments
For customers who are regularly late with payments, you may want to reach out to them before the payment is due to make sure everything is on track. Research has shown that sending proactive reminders to customers increases the likelihood of on-time payments. If you know the customer won’t pay before year-end, and you don’t want to make a big deal about it, make a note to contact them early next year.
If you’re worried you’ll never receive payment, have your attorney write an official letter notifying the recipient you’ll need to take legal action if payment isn’t received. If that doesn’t work, don’t wait any longer to take action and look into hiring a collections agency.
Take Care of This Now
The best reason to take care of your financial duties now is so you know you can handle the extra expenses that usually come up at year’s end, such as employee bonuses, holiday parties and client gifts. Retail-facing businesses will most likely need extra working capital to cover operating costs like hiring temp employees and purchasing inventory. Keeping a close watch on your expenses now can help you plan better for next year.
Keep a Constant Eye on Cash Flow
Review your cash flow regularly during the busy season to ensure you’re keeping your head above water and making it easier to plan for the future. Knowing the state of your cash flow also lessens the surprise from any potential financial problems or cash shortfalls.
Implement these tactics now, and you’ll end 2015 strong. Then, check out our list of New Year’s resolutions for small businesses to start 2016 on the right foot.