What do you do when your client just refuses to pay? Maybe you have already been there, maybe you haven’t, but if your business depends heavily on customers being satisfied and payments being made on time (sounds like most businesses to me- accounts payable outsourcing, HR firms, retail), you are bound to face this at some point. So now, what do you do when that happens? Deal with it politely and respectfully; here’s how accounts payable outsourcing firms recommend you proceed.
- Send Friendly Reminders– Monthly bills and phone calls politely reminding of overdue payments are fine and needed even. However you should take a look at your state’s collection laws to ensure you do not get into trouble with the law for harassment.
- Understand Things from the Client’s Point of View– Most often, clients don’t pay because they aren’t happy with the services provided. Place yourself in their shoes, understand where they come from and acknowledge their point of view. If needed, offer discounts on future services. Understand that it is easier to maintain relationships than build new ones; if there is a way to retain the client, do it. But if you find that things don’t work out in spite of your best efforts, it may be best to end the relationship.
- Get Legal Help– If your client still refuses to pay up and is giving you trouble, it might be time for you to approach the small claims court or civil court. Do thorough research and consider your options before doing this. Sometimes clients will agree to pay when things reach the court to avoid legal proceedings. Make sure your client is aware of your intentions beforehand. Do not let your legal proceedings take them by surprise.
Collecting payments from a client who just refuses to pay is not pleasant, which is why it makes sense to prevent it already together. Unfortunately such things need not always be in your hands. If you find that accounts payable management is becoming too much for you and your business, it might be a good idea to invest in an accounts payable outsourcing firm.
Accounts Payable is important for the functioning of any organisation. Unfortunately, it often takes the backseat when other priorities have to be attended to, however it is never wise to ignore AP. Here are some practices from accounts payable outsourcing experts to make accounts payable management more effective.
- Introduce a Centralised Accounts Payable Management System– If you have a business that has multiple branches, having each one handle its own payments can result in confusion and double payments. A centralised system will ensure that all payments are made correctly and on time. This is also proven to increase efficiency and productivity. Plus all AP data will be only a click away.
- Paperless Processing– Implementing a paperless payment processing system, as we all know, can be quite expensive, but it is definitely a lot more efficient. If you find yourself immersed in the confusion that accompanies paper invoices like missing invoices, receipts, forgetting payments etc you should consider implementing a paperless AP management system.
- Management Workflows– The efficiency of any financial process can be improved by developing a management workflow. This can help identify bottlenecks in the system and process and address them quickly. Streamlining processes and improving efficiency are also advantages of implementing a management workflow.
- Maintain Ledgers– A good businessman knows how important ledgers are in running a business. Ledgers recording inventory, payments and the rest are invaluable whether on paper or digital. Your ledger system must be simple, accurate, easy to use and understand.
Your business cannot grow without proper Accounts Payable Management. If you feel that it is a lot to take in and you don’t have the time to attend to AP, you can always try accounts payable outsourcing. Accounts payable outsourcing firms are efficient. You can let the professionals take care of your accounts payable while you focus on growing your business.
As a business owner you have probably seen your share of Profit and Loss Statements especially if you are accounts payable outsourcing, or maybe you haven’t. Maybe you don’t even know what a Profit and Loss statement is, not good news. A Profit and Loss statement is an important part of any business; it is a vital financial document. If you haven’t been paying attention to your P&L statement, it’s about time you did. Let us understand what this document is and why it is important.
Understanding Profit and Loss Statement
Sales- Costs= Profits, a basic equation.
Sales refer to the income you generate from selling your product or providing services to customers. Costs, on the other hand, refer to the expenses incurred by your business. So, your profit is technically what you have left over from your sales after all your expenses have been taken care of.
As all accounts payable outsourcing companies state, the P&L statement is an analysis of your financial situation. It provides detailed information about your company’s income, costs, overhead and net profit. So why is this analysis important?
Importance of P&L Statement
- Revenue Projections– All businesses make revenue projections annually. A P&L statement against your revenue projection can help you understand how your business is performing. It can show you how you are generating your income and managing your costs. This is useful when you are planning to expand your company, whether you are a accounts payable outsourcing company or website development company.
- Planning Future Expenses– Your P&L statement is useful when planning the future of your business. When forecasting future expenses, knowing where and how you spend your money will allow you to predict and prepare accordingly.
- For Investors– There is nothing that potential investors love more than a good Profit and Loss Statement. If investors see that you can make profits, they will find your business a good investment opportunity. This is also useful when you need to take out a loan or get credit. Your credit worthiness can be determined and substantiated by your P&L statement.
So how about a change? Your P&L statement is a useful piece of financial information. Don’t let it go to waste; make the best of it.
Numerous business owners today prefer outsourcing their Accounts Payable, but an equal, maybe more, number of business owners hesitate to avail of Accounts Payable outsourcing services. Every group has its own reason for the way they feel about outsourcing AP. If you are struggling to make a decision about outsourcing your Accounts Payable, this just what you need to read, for we are going to explore the pros and cons of AP outsourcing. By the end of this article, you may be able to make a decision.
Benefits of Accounts Payable Outsourcing
- Time and Money Saving– Outsourcing your accounts payable will free up your time and resources. You will no longer be required to make time to make sense of the AP records or invest in personnel and equipment for the job; all that can be quite expensive. You can now let the experts handle your accounts at lower costs.
- Fewer Errors– Considering all the numbers and money involved, it is but understandable that there will be numerous errors. However that doesn’t make the errors any more acceptable. Outsourcing the accounts can mean fewer errors, thanks to the software involved and the presence of professionals with years of experience.
- Efficient– You will find that an outsourced AP team is much more efficient than an in-house AP team. Your records will be up-to-date and accurate.
- Track Every Step– One of the blessings of modern technology is that it allows you to keep tabs on your accounts payable no matter where you are, which means you will always be in the loop and know where you are headed.
Negatives of Accounts Payable Outsourcing
- Loss of Control– Quite obvious this one; you will be relinquishing control of your accounts to another company, albeit a professional one. Never an easy thing to do; your business will always be your baby.
- Dependency on the AP company– It is never easy when you have to depend on another company to take care of things for you, especially something as important as your Accounts payable. You will have to depend on the AP company to handle your AP work.
So there; we have explored the pros and cons of AP outsourcing. Handing over any part of your finances to an outsider is fraught with difficulties, but it also has its perks. What you need to remember is that there are numerous Accounts Payable outsourcing companies out there. Find the right one and you won’t regret it; in fact you will wonder why you didn’t do it earlier. So do your research, take your time and decide on a company for your business.
Accounts Payable is an important function of any business; that this is done on time and with accuracy is crucial for the growth and development of the particular organisation. This task, though not a core business function, requires expertise and extensive work, and can often be quite expensive as well. The solution? Accounts Payable outsourcing.
Benefits of Outsourcing Accounts Payable
Why should you outsource your AP functions? Here are some of the benefits of outsourcing Accounts Payable.
- Accounts Payable is a task with the scope for numerous errors- from receipt to invoice processing, and these errors can prove to be quite expensive. Accounts Payable outsourcing reduces the incidence such errors considerably.
- This task is quite complicated and requires a lot of resources. Outsourcing the task will relieve you of the responsibility of hiring good personnel with adequate knowledge of AP and reduce operational costs. You can stick to what you know.
- There is no field today that is untouched by technology, Accounts Payable included. Running an in-house AP operation would mean investing in reliable software and sustaining it. Outsource the task and your service provider will take care of the whole thing and you won’t have to know anything.
- You will also see greater productivity at lower processing costs.
- Improved compliance
- Reduced training costs as this will be handled by the accounts payable organization.
- Contracted Service Level Agreements (SLAs) will ensure that the work is structured, consistent and meets best global standards. You can also assess quality of work by time taken, cost, error rate and internal control metrics.
Accounts Payable outsourcing is a strategic business decision. It is the perfect choice for any business, big, medium or small. Contracted SLAs ensure consistent and good performance, reduced costs, greater efficiency and productivity, use of latest technology without having to invest in it or worry about its sustenance and lower error rate. So what do you have to lose really? Make the best of the benefits of outsourcing Accounts Payable.