It’s important to make sure you get paid for your products and services. Setting payment terms that are good for your customers but also healthy for your business, is important. In this episode of MissionBusinessPodcast.com Bernard Roesch explains how payment terms impact the financial health of your business and what to consider when setting payment terms.
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When Do You Need to Get Paid?
While it’s great to be paid in advance for products and services, requiring this of all customers might mean you miss out on great business opportunities. You can structure your payment terms based on a few different factors.
Consider when you have to pay vendors – Some of your vendors will have specific payment terms required of you. So, it’s important that you make sure that your payment terms for when you get paid from your customers, match up reasonably with when you are expected to pay your vendors.
Plan on late payments – If you think you need to be paid by day 30, after an invoice is sent, make the payment terms net 15 or net 20. That will buy you extra time to allow for some customers to pay late while, not affecting the financial health of your business. Since you don’t need the funds, until day 30. There are a number of ways to configure your payment terms, but considering the above factors is important, as a starting point.
Configuring QuickBooks For Payment Terms
Once you have determined what payment terms to use in your business. You need to communicate those effectively to customers. You can configure these payment terms to appear on your invoices when you send them to customers. Make sure the invoice template that you use has the payment terms and due date, clearly noted. You can configure standard payment terms for all customers within QuickBooks and also custom payment terms, for individual customers. These payment terms will automatically be used when sending invoices for customers.
Follow-up to Get Paid
Clearly noting payment terms and due dates on invoices is important, but following-up to get payment helps you ensure you are paid reasonably on time. Below are a few resources you can use, depending on your follow-up needs.
- Accounts Receivable aging report. You can use the Accounts Receivable aging report within QuickBooks to quickly see which invoices need to be followed-up with, depending on when they are due or how far overdue the invoices are.
- You can manually follow-up via email and add notes to transactions and customers within QuickBooks. Using the Accounts Receivable aging report and manually following up is a simple way to follow up on invoices.
- If you have many customers that need to be followed-up with, you can use bulk email to send statements to many customers at once. This enables you to efficiently follow-up with many customers, based on when their invoices are due or how far overdue their invoices are.
Need Help Configuring Your QuickBooks
If you need support designing healthy payment terms for your business and configuring a workflow to manage Accounts Receivable within QuickBooks, contact Bernard today.
You can also visit MissionBusinessPodcast.com for more insights that Bernard has been sharing with us in the previous episodes.