I think it’s fair to say that no one really enjoys accounts receivable and collections. It can be uncomfortable to send out late notices or make calls about overdue accounts. And when nonprofit organizations have to repeatedly ask people to pay money owed, it can eat up a lot of time that could otherwise be used towards achieving their mission. As for the person who owes the money, well, no one likes getting that call or email reminding them that they still haven’t paid their bill. So what can an organization do to make the process more efficient and less painful? Below are a few things that I have found helpful in managing accounts receivable.
Have A Plan
Make a clear plan of who in your organization is responsible for keeping an eye on outstanding receivables and reaching out to collect. Maybe your bookkeeper or accountant handles the whole process. Maybe the accountant alerts someone else within the organization when a bill is overdue, and then an employee who has a relationship with the customer will reach out. However the tasks are divvied up make sure everyone involved is aware of their role.
Stay On Schedule
Make it a regular habit to review receivables and remind customers if they fall behind. Draw up a schedule - and stick to it! Yes, it might feel like you’re being a pest sometimes, but I’ve found people are much more receptive to a reminder of an invoice that’s one month old rather than one year old. Your organization is more likely to collect if you stay in frequent contact with your customers regarding receivables.
Make Paying Easy
One way to improve the collections process is to make it easy for people to pay you. If you send a reminder to a customer asking them to mail a check, they might easily forget even if they have the best intentions. If you send a reminder with a link to pay online, they can click and take care of it right then and there. In Quickbooks Online you can enable a feature to accept credit card payments within QBO. That way each email reminder that you send includes an link for online payment. It’s easy for the customer and is also recorded right away in QBO, which removes an extra accounting step.
Managing your accounts receivable and collections is an ongoing process. It might not be much fun, but it’s essential to the financial health of your organization. By setting clear expectations, staying in regular communication with customers, and using straightforward payment methods, you can keep your nonprofit accounts receivable running smoothly.