If a Customer Invoice Converts from Open to Past Due, Then Get Notified Immediately!
One of the most important components of managing a small business is to get paid for the goods and services you provide in a timely fashion. In a perfect world, your customers or clients will pay your invoices within your specified terms. Unfortunately, reality suggests otherwise and most companies are forced to spend a lot of time and effort in dealing with following up on past due invoices and all of the other headaches associated with collections.
It is critical to keep track of past due invoices in order to properly maintain cash flow and keep the business moving and grooving. Let’s drill down into two common events that can cause an invoice to convert from open (or current) to past due (or overdue) and how you can adjust your collections methodology in order to get paid faster and significantly reduce aging receivables.
- The customer or client fails to pay your invoice by its due date. If your current accounting protocol is to generate an accounts receivable aging report on a monthly or ad-hoc basis, then you may miss out on opportunities to collect on your invoices faster. Most accounting software applications fail to provide you with notifications whenever invoices convert from open to past due, so it is ultimately the responsibility of your back office to fetch this information. If a customer’s invoice was due on the 15th of the month and you review your aging report at the end of the month, your collections efforts will be delayed by approximately two weeks. In many cases, this can cripple your cash flow and cause you to go out of your way and make unnecessary adjustments in order to ensure you have enough cash to pay your own bills and fund payroll. Utilizing this reactive approach to managing accounts receivable is not optimal. Implementing stricter controls internally in order to run your business the right way without the uninvited stress of not getting paid is absolutely critical.
- Internal bookkeeping and clerical errors cause a skewed and inaccurate AR aging report. Perhaps the customer did, in fact, pay their invoice but the payment was recorded to the wrong customer account or it was recorded directly as a deposit instead of being applied to the customer’s invoice – which is now in a past due state. I think we can all agree that it is both awkward and unprofessional to inconvenience your customer by following up on an invoice that they already paid. Some may even feel insulted. As a business owner, it is your obligation to ensure that your records are accurate at all times and catch any erroneous entries before you take action.
Both scenarios above warrant a smart notification system to assist you with avoiding bookkeeping mistakes and reducing aging receivables. Pinger listens to specific events that occur within your accounting system (i.e. Quickbooks, Xero, Sage, Netsuite) and delivers notifications via Slack, Workplace by Facebook, email and SMS whenever an invoice converts from open to past due. So on the day that your customer’s invoice converts to past due, you will be notified immediately as opposed to fetching this data within your accounting system. This ping equips your company with a proactive method of managing accounts receivable. Many companies also activate this ping specifically for accountability purposes in order to stay ahead of their invoices and attempt to avoid the notifications altogether. For added convenience, Pinger’s integration with Quickbooks and Slack will allow you to send invoice reminders to your customers directly from within Slack (instead of logging into Quickbooks, visiting the customer’s account, locating the past due invoice and sending it). When Pinger identifies that an invoice is past due, it will send a notification into your preferred Slack channel. From there, users have the option to “Send Reminder” which will send a command back to Quickbooks to resend the invoice to the customer. This is one of many functions offered by Pinger that allows you to proactively manage your company’s back office.