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For anyone running a large networking or membership organisation coping with thousands of transactions of the same value is a challenge. In the case of 4Networking, Tuesday to Friday thousands of members are booking breakfasts online for £12 each (they all need a VAT receipt) [note in addition to breakfasts its £499 plus VAT to join and there is an annual membership fee after the first year], so what information do they analyse, well they need to know, which member or visitor, which group/venue, which area leader, for visitors they need to know the number of visits (so that they can charge when the maximum is reached), when membership renewals are due. Thats a lot of information and to run an efficient network you need to quickly see the results and take action if attendees drop.
The solution that we used was to have a description made up of numbers separated with a # so that you could quickly extract results for any data group or multiple groups.
The other challenge faced is that Memberships cover a future period and to comply with revenue recognition rules the revenue must be phased over the period to which it relates.
- Discuss credit terms with your new client – set the expectation
- Change your credit terms to be less than they are right now – research has shown that invoices are paid 2 weeks late. So better to be paid late on short credit terms than late on long credit terms
- Get invoices out on time – be clear about what makes a service or product billable and bill it. Don’t be shy about billing promptly, the client has had the service\product, they need to pay for it
- Make it standout – clients processing lots of invoices may put it on the pile with the rest, but if it stands out then chances are that it will get paid faster
- Be able to report your aged debtors and then chase the late ones rigorously. Send a statement and call them – some people get so much email that it gets ignored
- Add late payment charges – you can always reverse them but it will generate a conversation where you can re-iterate your priority to be paid on time
- Get the entity right that you are invoicing – if it is called Jupiter Construction Limited, don’t put JC limited on the invoice
- Make it get to the right person – does it need to go to the budget holder or accounts payable or both
- Do you offer multiple payment methods – cheque, bank transfer, paypal, debit card, credit card – the more methods the more likely you will get paid faster.
- Review the average days to pay for your clients and target the late ones – don’t treat all clients the same
- Delegate your credit control – if you are running the business and delivering to clients you won’t focus on this and a part time resource can
- Send electronic invoices with Pay Now feature – Xero cloud accounting does this