How to eliminate massive Accounts Receivables

3 Ways to get paid faster and avoid endless accounts receivable balances.

One of the toughest lessons I had to learn in my business ownership career was that people view the world through a lens of “what’s in it for me?”. So when it comes to getting paid for the work that we do, it’s no different. Being young and naive in those early years, I thought as soon as I finish the work, my clients would be just as eager to pay me as I am to get paid.. Man did I learn the hard way.

After racking up accounts receivables in the tens of thousands and in some cases hundreds of thousands, I found myself completely cash strapped with no end in sight. I started replaying in my head the excuses and experiences I had trying to collect on the bills:

• “I am really busy right now, I will write and mail you a check when I get home”
• “I never got your bill in the mail, please resend it and I will pay you.”
• “Can I wait and pay you by the 15th of next month?”
• “Can I give you 50% now and 50% in two weeks”

All of the responses I was getting had one thing in common - they had nothing to do with my business and everything to do with the convenience and current status of the client. That’s when I realized that I was going about this all wrong and needed to establish systems in my business that reflected how people pay and view other expenses in their life.

1. Embrace Email

We live in the age of Amazon.com. Everyone wants their products/ services to appear in a quick search and of course they NEED two-day free shipping. One of the biggest objections I hear to this is: 

“You don’t understand, my clients are old school, they don’t use email.” 

- Every contractor

While there certainly are retirees and the like that have never had to use email, I would be surprised to find a large enough sample size of the population that has never used Amazon. If they have used Amazon even once, they have an email address. 

This is an area that I find most business owners are too lenient and don’t understand the atmosphere they are creating. It’s not about forcing your clients into anything but more about a reframing of the question:

Instead of:

•  “What is the best method to send and contact you regarding your estimates and invoices?” or "Do you use email?"

Try:

•  “Mrs. Jones we pride ourselves on being a paperless organization, this allows us to be more efficient in everything we do, including serving you better. What’s a good email address where I can send your estimates/invoices to? I promise we will not spam you or ask you to check your inbox more than once.”

When you make a standard practice in your business, you will be amazed how the vast majority of people abide by it no questions asked. This is how big organization thrive. They don’t offer every option under the sun.. if you don’t believe me trying finding Amazon, Google or Facebook’s customer service phone number without typing the request into a search engine. They make it hard on purpose - they don’t want you to call them because it wastes their valuable resources. They have invested billions into interfaces that make buying from them as seamless as possible so they can rinse and repeat millions of times.

Establish a policy of being a paperless organization, this will help you improve in many other areas of business not just bill collection. For those one-off cases where sweet Mrs.Stevens down the street only has a home phone, you can make exceptions but whenever possible stick to your guns. Being a company that has intentional policies will attract and retain the right types of clients.

Email use cases:

The second the job gets completed, email right from the field:

Using a system like SingleOps can empower your foreman or any other field-facing members of your team to in just a click send the invoice email right to your clients as soon as it is completed.

Invoice in bulk at the end of the day, week, month for all jobs:

If you do highly volumes of recurring service oriented work, being able to batch invoice about 10, 50, even 100 invoices all at once can be a massive time saver.

Check the status of the Email to see if it has been opened, bounced and even if the link inside the email has been clicked:

Have proof that your emails are getting opened and seen. Email status are also a great way to catch if an email address was entered incorrectly or has bounced.

2. Start taking Credit Cards

This is one of the most important strategies you can implement into your business. Like it or not the world exists on credit card transactions. Look back at your past ten purchases this month. How many of them did you pay by check or cash? 

If your clients are paying most all of their other bills using their card or direct deposit but you are that lonely paper bill asking for a check, you are adding friction to their life.

Friction tends to make people procrastinate. 

Your clients hired you because they needed a professional to take care of a service on their property that they either can’t do or don’t want to do themselves. Knowing this in itself proves that they obviously have other priorities outside of the tree you are cutting down or the landscape bed you are adding mulch to. 

Show your clients that you respect their time and priorities by making the process to pay you as easy as it was to hire you. On the flip side, you get the added bonus of having that payment get deposited in your account for you automatically without the completely wasteful trip made to the bank. If you are using an integrated software system like SingleOps, that payment will automatically pay off that invoice and adjust the balance on your client’s account in both SingleOps AND Quickbooks.

Use cases for credit cards:

Process a deposit or completion payment right from your phone/tablet in the field:

If a client is on site while you are completing the work, this can be a great time to grab them and process card quickly so that you are both on your way. You can avoid complicating the process by having to come back later or saying you will just email them a PDF that they then need to print out and mail a check with.

Save a credit card on file on your client’s account for auto-charging:

Email a link to their client portal so they can login in and pay with their card at their convenience:

Most client’s won’t be at the property when you perform the work. If it is a homeowner, they likely won’t be home and finished up with family things, dinner etc. until 8-9PM. Make it easier for them to hop on their email, click the link and drop their card into a client portal checkout just like they are used to on every other online bill they pay.

I know what you are thinking, the upsides of accepting credit cards are great but what about the downsides of card fees. Why should you have to eat 1-3% of your profits just to get paid what you are already owed?

It is true that credit card processing fees are an unavoidable expense of doing business today. The good news is, if you partner with the right software system, you have the ability to turn the credit card fee on your client. Here is what this looks like in SingleOps:

3. Reminder System

Going along with the logic that your client’s are busy people, it can be very effective to have a simple reminder system. Emails are forgotten, phone calls get ignored and so having a process in place to keep things digital and easy is important.

The best way I have seen this done is to pick the cadence that you think would work for your client base. For example, in my business, for our one-time projects, we had a standing reminder on our office manager’s calendar to go to the open invoices tab and batch send out the invoice reminders. This was a simple email template that we built right into our software program that re-sent the invoice link to the client portal so our clients could be reminded of their open balance and prompted again to follow the link and pay their invoice. 

You can structure the timing and language any way you would like but the important thing is that you have a process in place that you stay consistent with. Here is how we did it in SingleOps:

Go to the Open Invoices page and select all the invoices past a certain date that we wanted to send a reminder for:

Then click email and select the appropriate invoice email template:

All of these strategies are in an effort to consolidate and streamline your business operations. While some of the tips mentioned here might not a direct fit for your business, the principles behind them are intended to help guide you to start thinking about your business in terms how you want it to operate and not what the “industry standard is”. Challenge the norms and see your company prosper!