The key aspect to developing a job shop or any other manufacturing business is a steady cash flow. Without money coming in on a regular basis, it’s impossible to operate effectively, if at all. For many firms, the most effective means of making this possible is to constantly invoice customers and ensure they pay on time. Whether it’s a repair shop or a machinist service, businesses should have a means to get payments quickly and efficiently. They should also be able to track them effectively, and barcodes are one method of doing this. Whatever the means, businesses should constantly look for ways to improve their invoice processing.
Establishing rules and relations
There are two aspects of invoice processing. One is delivering the invoice to the customer and receiving payment. The other is completing the transaction through accounting and other platforms. The obvious first step is establishing guidelines to ensure customers pay completely and on-time. American Express Open Forum offered a few suggestions. One approach is to assess the customer before fully establishing a relationship with them. Checking their credit and payment histories with other businesses is a great starting point, for it can determine their reliability in making payments. Determining customer preferences overall is another method, because sometimes the client may have his or her own paperwork methods. Any mismatch can result in a delay in payment.
Then comes the matter of making the invoice itself. When a service is finished or a project completed, the first order of business is to make the invoice right away. Transactions can get hampered by the payment cycles of the customer, so sooner is always better. Moreover, there should be very clear terms dictating payment. Establishing a net payment date as opposed to “due on receipt” will make it far easier to know when money will arrive from clients, allowing companies to better plan their monthly budgets. It can also better synchronize with patron payment schedules, reducing the headaches of working out transactions. Any trade terms, such as early bird discounts, should also have clear dates to minimize any haggling.
Automating the task
After establishing strong rules with customers regarding invoicing, the next task is to streamline the invoice process itself so receipt and payment get handled efficiently. Sutherland Global recommended establishing benchmarks that determine the level of efficacy and speed in delivering invoices and receiving payments. That includes whether the company collects data such as the time between sending out the invoice and the payment clearing at the bank.
Once there are metrics in place, one effort to improve invoices is to take a digital route. If a shop is still using paper invoices, it’s well behind its competition. Most ERP platforms, including Microsoft Dynamics NAV, offer electronic invoices that can be sent via secure email to ensure timely receipt. It also ensures a company can be accountable for payment deadlines. From there, it’s essential to build workflows and business processes that establish what happens in invoicing. That goes from the steps for manually inputting all critical data that can’t be automated to determining the formula for invoice numbers.
Data capture is another important way to improve processing, especially if customers still demand paper invoices. It’s an effective method of recalling and assessing invoices, especially in determining if the customer paid it and whether it’s necessary to make collection calls. NAV Barcode Scanning provides an option, especially if there are still paper invoices in use. A company can scan the invoice and match it with the ledger transactions. If there is a discrepancy, the company can make the necessary calls to ensure it receives its proper compensation. By using barcodes, businesses can have an easier time maintaining a consistent cash flow.
Job shops interested in learning more about the benefits of NAV Barcode Scanning should download the “Keeping the Physical World and the Virtual World in Sync” white paper today.