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Now viewing: July 2018

Collecting Delinquent Accounts Receivable: Not As Scary As You Might Think

Posted July 23, 2018

Something every business deals with: collecting delinquent accounts. It’s a position no business wants to be in—you’re not getting the money you are owed, but you’re also running the risk of losing a customer and a business relationship.

Collections take a delicate touch—you want to get your money, but you also want to keep your customer!

Communication!

Your first and best tool for collections is communication. Communicate with your customers before the invoice is created so they know what to expect (and make sure that they agree with the charges). Make sure your invoices are clear and easy to understand, so customers know exactly what is owed, what you are billing them for, and when it is due.

Communicate with your customers after the invoice has been sent to make sure they received the invoice. Mailed and emailed invoices can and do get lost along the way sometimes.

They can also get “lost” on desks or in email in-boxes—sometimes a reminder helps your customer’s accounting department remember to track down an invoice that is waiting on approval for payment.

Communicate with your customers if the invoice becomes delinquent as well. Paying when an invoice is due is ideal, but communicating with your customer and working out a payment schedule is second best.

If a customer agrees to a payment date and then misses that date, that debt very well might end up with a collections agency. While you want to be reasonable and flexible, you also need to receive money for your services. A client who does not respect your business may not be a client you need to keep.

Be firm but fair

It’s most effective to remain as pleasant as possible, but you also need to remember that you are fully within your rights to ask for payment for services rendered (and that payment should be prompt—they’ve already had the service, and now it’s time to pay up). You’re not bothering anyone or being the bad guy by asking for payment for services received; you’re simply conducting business in a responsible manner.

Once an account has reached 90 days past due, it is likely that your client isn’t going to pay. At this point, you may have no choice but to hand the account off to a collections agency.

Like all aspects of your business, collections should be part of a plan that you have worked out and for which you have created procedures. There is some responsibility on the business owner to stay on top of their own accounts receivable as well—a lot of time can be wasted in waiting for payments for invoices that were never received if you aren’t communicating with customers regularly. Getting in touch with customers pro-actively also lets customers know that you are running a legitimate business, and that you know exactly what is going on with it.

For further detail on setting up an effective collections process, here is an excellent article from ABC Amega about creating your best chances to receive payment for your services.

Contact Shaw & Associates Chartered Accountants to help you out with this decision. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Accounting In The Cloud

Posted July 6, 2018

Rather than purchasing a software package and loading it up on the computers or server in your office, you can do all your accounting and keep all your accounting records online in an online “cloud” accounting service.

This is becoming a far more regular way for businesses to manage their accounting, but there are some pros and cons to doing this that you need to know before deciding whether cloud accounting is the right fit for your business.

The benefits of using an online accounting service:

  • You don’t need to make a large up-front purchase of software. Most (if not all) online software vendors will charge you a monthly subscription fee.
  • Your software and data are available on any computer or handheld device. You don’t need to purchase multiple licenses or software packages for multiple computers and users in your office. Both you and your clients can access the application and the data anytime, anywhere, which can be very useful and efficient when going over data with clients.
  • The supplier of the online accounting software is responsible for upgrading the software and doing backups. You don’t need to download new software patches and upgrades yourself (or buy a new version of your existing software); that should all be handled on the vendor’s end.
  • Data and software are always as current as possible. All work is done in real-time. An invoice or cheque entered by one person can be seen instantly by someone in another location.
  • There are options available to take your data processing completely out of your hands and all the responsibility of your bookkeeper/accountant. There are apps that can be used that can get all your information to your accountant without ever stepping foot in their office. It’s a great solution for business owners that just don’t have the time to deliver piles of paper regularly to their accountants office.

The drawbacks to using an online accounting service:

  • Security is the top concern for people using an online accounting/cloud service. Online accounting services first and foremost use encryption to keep data secure. From systemsandsoftware.com: “Cloud services utilize more complex security methods than the average computer owner is able to devise, giving your cloud-stored data an added level of protection.”
  • In spite of security being the top concern for most people, the more real danger is data being lost, rather than being hacked. One of the first steps when deciding to use an online accounting package would be to investigate how the company handles data storage. If they have a history of data loss, they probably are not a good choice for your cloud accounting needs. To limit the dangers of data loss, using more than one cloud-based system to back up your files is recommended (such as Google Drive).
  • Your financial data is stored with a third party. Regardless of how good their security is, you have no control over what they choose to do with that data.
  •  An internet connection is required. If your internet is down, you’re not doing any accounting today.

Moving from an office-based accounting package to one based on the cloud is a big step for any company. Shaw & Associates Chartered Accounting can help you figure out if this is a good move for your company, and which service you should choose. They can make the whole transition smooth and painless, allowing you to continue with the work that you do best.  

Contact Shaw & Associates Chartered Accountants to help you out with this decision. One complimentary meeting with us will put you and your business on a more profitable and positive path.