How to get control over your debtors and how Xero makes it easier.
Running a business is a balancing act, and one of your most important responsibilities is managing cash flow. If you don’t learn to manage your business’ cash flow efficiently, it’s going to end up in trouble. That’s why it is crucial to ensure that you keep control of your debtors and get paid on time.
Read on to learn how to do this, and how using Xero can help make it so much easier.
Getting your debtors under control
When running a business, it is crucial that you keep control of how and when you send out invoices. And most importantly, you also need to be able to keep track of who has and hasn’t paid you.
There are a few steps you can implement to help get your debtors under control and make sure you get paid on time.
Best Practices of Debtor Control
1. Outline your payment terms upfront to clients or customers. You should also ensure to indicate your full payment details, what amount is owed and when the due date is for the invoice to be paid.
2. Send your invoices as well as reminders to your debtors immediately once a job has been completed so that both parties are aware of any money that is outstanding. It is also important to send reminders when a payment is late.
3. You should also have late payment conditions set out when sending an invoice to your debtors.
4. Another crucial step in the process is making sure you are accurately and consistently recording each and every invoice and transaction. Having accurate records is important in monitoring your business’ standing and complying with tax regulations.
How Xero’s accounting software can help
When keeping track of invoicing, your first thought might be to use an Excel spreadsheet. However, Excel often ends up being inaccurate and is definitely more time-consuming. Using Xero will allow for a much more efficient and streamlined process.
With Xero, you can:
1. Create invoices in a timely manner without the need to remember any details, manually change reference numbers, dates, or update formulas. Xero does this all for you.
2. Xero offers multiple branding styles as well as the ability to invoice your debtors in the applicable currency.
3. Any preloaded items can be chosen with the relevant information already pre-populated within the invoice.
4. Once your invoice is ready, you can quickly and easily send it on to the relevant client.
5. Xero’s functionality also allows you to keep track of credit notes and statements, and also allows you to send recurring invoices when needed.
6. Use the ‘awaiting payment list’ function, which will allow you to see which invoices are still outstanding, as well as mark invoices as paid once a payment has been made. Your accountant will generally follow up on any unpaid invoices to ensure that payments are made.
7. Xero also allows you to use your data for sales forecasting, cash flow projections, knowing what your VAT is, and preparing your management accounts.
Using Xero means that you won’t need to store data on a time-consuming and inaccurate Excel spreadsheet and will save you the hassle of having to perform reconciliation between an Excel spreadsheet and your accounting system. With Xero’s accounting dashboard, you’ll be able to keep an eye on your finances and monitor which invoices have been paid by your debtors and which ones have not. It even allows you to set up automatic payment reminders for both yourself as well as your clients. And if you are looking to accelerate your debtor’s collection process (and who isn’t?), Cloudworx can also help you set up Chaser. Chaser is an additional accounts receivable software that has the functionality and capability of automating payment invoice reminders. Chaser has shown to get invoices paid up to 16 days earlier than normal.
Keeping control of which of your debtors is a time-consuming task and shouldn’t take time away from running your business. Incorporating Xero into your business will not only streamline the whole accounting process, but will also help to ensure you always stay in control of your debtors.
So, say goodbye to that Excel spreadsheet and contact Cloudworx today to get your business set up on Xero.