8 best ways to turn accounts receivable into cash

Before moving to accounts receivable management first, let’s find out what’s the definition of accounts receivable management.

Accounts receivable referred to as the collection of due payments or credit sale payments a company or business owed to its customers. And accounts receivable management is a process of collecting more due payments to inflow more cash into the company’s account.

So, why we say its important for a business and why it has a direct effect on the company’s balance sheet?

Every business has a very common goal and i.e. generating more revenue & profit and sales is the only way to obtain profit. But there are cases when company sales its product in the form of credit and the difficult part is to collect this credit amount from customers. These credit sales will reflect as accounts receivable in the balance sheet under assets. But these need to turn to cash in a short time to maintain cash in the company’s account.

Now, let’s find out the best possible ways to turn accounts receivable into cash:

The first step would be:

  • Send invoices immediately
  • Prepare to listen to customer excuses
  • Have a payable credit cycle
  • Do a proper cash flow forecast
  • Send repeated payment reminders
  • Start to communicate over a call
  • Lure them with discounts & new features
  • Have alternative plans
  1. Send invoices immediately: Sales is the first step towards making the profit. As we know sales is the first step towards making the profit. In this path of making more sales & profit, sometimes the company’s sale of their products in credits. It’s a great method but collecting those credit sale payments is very difficult as a business has to keep running behind the customer. It’s not because customers don’t want to pay, sometimes they forget to pay. So, the best way to get your due payments is to keep them remind and for that sending invoices immediately after the sale is a must.
  2. Prepare to listen to customer excuses:  It mostly happens that we never give that much important to pay the credit bills and same happens with customers they always try to delay the payments as they already receive their product or service so they gave importance to other payments. So, its the job of the business owner or the sales person to convince them to make the payment within the given time. And the salesperson has to find different ways to decline the customer excuses as they will try to delay it. Get on board your financial advisors or strategic partners to come up with a workable strategy to collect unpaid payments.

  3. Have a payable credit cycle: Do an analysis and reorganize your credit cycle. Usually, long credit cycle doesn’t pay you more as the customer feel free about the payment and in a longer period, they often forget to disburse payments. It would be better for small businesses to offer a short-term credit period to customers and with proper terms & conditions.
  4. Do a proper cash flow forecast: Cash flow forecast helps a business to find out the most possible incomes  & expenses for upcoming months & years. It helps to know when the business would run out of cash beforehand so that the business would be ready with enough cash.
  5. Send repeated payment reminders: Like us, people never remember the payments they have to pay in next month or in upcoming days. As its very necessary for a business to collect sales payments so its the job of the business owner or sales manager to use a software for sending automated reminders to unpaid customers. The best software to send automated reminders is SlickAccount. It the best online accounting software for small business with total inventory management solution and automated invoice sending & payment reminders.
  6. Start to communicate over a call: Sending payment reminders is a great method to reduce the burden of due payments but people often don’t check mailbox on daily basis. So, there should another way to remind the customer about the payment. The best way is to discuss over a call with the customer and as it will be a direct communication with the customer would get the least chance of delaying payment or giving any excuse.
  7. Lure them with discounts & new features:  Luring customers with new features & discounts is another way of getting credit payments. A business should offer discounts to the customers if they pay within a stipulated period also they can offer to get new features at the same price if they pay within given credit period. This offer most likely will increase the frequency of getting more due payments.
  8. Have alternative plans: Be proactive with new solutions to recover due payments. As business needs to keep running in order to achieve the predefined goal and for this cash flow is a vital thing. Every month a business needs enough cash to infuse either from sales or any funding to meet operating expense and to have a cash-in-hand balance. If the sales money would be delayed then the business may face some serious financial issue. So, a business owner should always be ready with strong strategies to get the unpaid dues in time and for this cash flow projection is a must. The best tool to do an accurate cash flow projection is ProfitBoard(a product of SlickAccount). Its the best & effective cash flow management tool for small business. 

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