Three Practical Ways To Manage Your Accounts Payable

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When you own or operate a business, it is vital that you keep up with your accounts payable.  Not doing so can result in difficulty obtaining goods you need to run your business, and delinquency can damage the reputation of the business.  Paying your creditors on time can help keep you in business.  Follow these tips to manage your accounts payable to avoid delinquency.

Take Advantage of Technology

Technology can help you stay on top of your accounts payable.  Make sure that your accounting software has the ability to manage your accounts payable; if it doesn’t, upgrade your software so that you can get rid of paper ledgers and spreadsheets and maintain your accounts by computer.  You can also hire a virtual, part time accounting assistant to help with managing your accounts payable.  A part time virtual accountant will need just a few hours per week to manage your accounts.  Having someone to assist you outside of the business is also beneficial for eliminating theft from your business, which often occurs through accounts payable.  

Opt For Auto-Pay

For recurring payments, consider opting for an auto-pay function that will automatically debit the amount you owe on the due date each month.  This way, you won’t have to spend any time on managing these accounts, other than to enter the debit into your accounting software.  Utilities, mortgage and insurance companies, and other large payees often offer this feature, which helps ensure that the creditors that you must maintain each.  Make sure that auto-pays are entered accurately into your accounting software each month. 

Make Your Accounting Software Work For You

Generate a report for your available cash flow if you have to juggle your accounts payable.  With a few simple clicks of your accounting software, you should be able to determine the balances of your checking account and your credit lines.  If you must pay some of your creditors late, give them a courtesy call to let them know before the payment becomes overdue.  This can help salvage your relationship with the creditor. 

What Can Debt Do For Your Small Business

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All too often the small business person thinks that debt is a universally bad thing.  The truth is there are a lot of ways you can use debt to work for you and your business.  Consider some of the following ways debt can be good for you and your business.  

Building Credit

There are just a few ways to build your credit and one of the most critical is accruing manageable debts.  When you have a small business it is likely there will come a time when you will need a loan and if you have no credit you will find it exceedingly difficult.  When working to build this credit you should start with small debts that are manageable.  You’ll want to get a debt that you can pay off within a few months and make several payments to make it work best for your credit.  

Making Large Purchases

Most businesses will run up against a time when they will need a large purchase; new equipment, a move or a promotion.  This means you’ll likely have to go into debt to cover the expense.  This is the perfect opportunity to also build your credit by creating a small, manageable debt.  

Supplementing Cash Flow

Some businesses are seasonal; in fact most businesses have busy seasons and slow seasons.  If you haven’t learned the trick of budgeting through the slow seasons it may be the right time to go into manageable debt.  The most important thing to do is carefully consider what you spend and how much you go into debt.  

Making Repairs

It always seems that something breaks down when you have no extra money.  In this case, having the opportunity to extend a little by way of going into debt can help your business through a rough patch. 

What are the best ways to get your delinquent customer accounts paid?

Creative Ways To Finance Your Small Business

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 Getting a small business loan can be difficult in the current economy.  Although banks are still willing to lend money to get businesses started, if your business venture does not the lender’s typical business model and your business is deemed high risk, you may have trouble obtaining a loan.  Fortunately, there are other options to consider besides traditional bank loans to get the startup funds and equipment that you need.

Equipment Leasing is one way to get the equipment that you need without investing a significant amount of money initially.  You pay for your equipment in monthly installments rather than paying for the equipment in full upfront.  There are also tax incentives for leasing your equipment.  

Factoring is an option for getting cash.  If your business will produce invoices upon delivery of services or goods, then you may qualify for factoring.  Essentially, your invoices will be sold for cash so that you have the money before the services or goods are delivered.  The cash is yours, and you won’t be making payments to anyone, as factoring does not involve the lending of money. 

Peer to peer loans are another option for getting some of the startup cash that you need to get your small business up and running.  This program is available through online sites, and you can get up to $25,000.  With this type of lending, a group of your peers will lend you small amounts; with the small amounts that are loaned by each peer, the risk is minimal for the lenders.  With enough peers, you can get a considerable amount of cash that can be paid back in small amounts.  

Crowd funding is another option for financing your small business.  Unlike a loan, this system works by bartering.  There are multiple sites online that offer crowd funding, and you can propose your business on the site.  Interested parties will offer you cash in exchange for whatever you can offer them, such as finished goods or your services. 

When should you consider going into debt with your small business?

Four Questions To Guide In Getting Delinquent Accounts Paid

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With the current state of the economy, many business owners are finding it difficult to manage their accounts payable.  One cause of this is the number of accounts receivable that are delinquent.  If you are not getting paid, it makes it very difficult to pay your creditors.  Following are some tips for getting the money you are owed so that you can efficiently manage your accounts payable.  

1. Are you sending an immediate reminder for missed payments?

One way to get your delinquent accounts paid is to send a reminder to the delinquent customer the day after the payment is missed.  Use friendly language, particularly if the customer does not have a habit of being late with payments.  If it is an oversight, you may be able to collect immediately.  If the customer is aware that they have not paid you, you will be catching the problem early before another payment is missed.

2. Are you sending email or postal mail reminders a week before due date?

If you have customers that are habitually late, send them a reminder through email or postal mail a week before the payment is due.  Some customers are late paying due to being unorganized rather than being short of funds.  A reminder before the payment is due may help you get paid on time.

3. Are you making follow up phone calls for late payments?

Follow up with a phone call if you don’t get a payment within a week of sending the reminder for late payment.  It is easy for customers to ignore a letter, but a phone call is more difficult to dodge.  The call may be ignored as well; however, if the customer answers, politely inquire as to when you can expect payment.  If there is a problem, many customers will be upfront in telling you that the payment will be delayed and when they will be able to pay.

4. Are you offering alternative payment options?

If you can be flexible by offering the option of paying the amount owed in installments, then do so.  A small portion every two weeks or monthly is better than a large debt going uncollected.  However, if it seems that the customer is unwilling to work out a plan for repayment, turn the account over to collections.  The longer you wait, the harder it is to recover payment.