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Unpaid invoices in QuickBooks? It’s time for a change

AR collectionsAccounting and Software

Alex Louisy

Dec 15, 2019

Late payments in B2B remain a significant problem all over the world. It’s estimated that 25% of businesses go bust due to late payments, this number may be hard to believe but it highlights the critical role of healthy cash flows for businesses.

While the blame often lies with customers who don’t pay on time, we tend to forget that it’s also the role of merchants to keep tabs on their unpaid invoices and follow up when necessary.

Many businesses still issue invoices with payment terms (net 30 for example), send it to their customers, and then simply wait to receive payment. But, this isn’t enough! Unpaid invoices need to be chased systematically as soon as they become overdue. And unfortunately, companies that implement systematic processes for cash collection remain the exception rather than the rule.

The two reasons that these processes are not that widespread are: (1) companies tend to ignore the underlying cost of having too many overdue invoices, and (2) until recently there haven’t been many suitable Account Receivables tools available.

Managing receivables with QuickBooks

QuickBooks has become much more than just an accounting tool: it now offers a wide array of features to help you run your business better. In addition to basic accounting, companies use it for payroll, expense management, inventory management, and much much more.

When it comes to receivables, it has features that help you manage late payments, track overdue invoices, and send email reminders to your customers. If your business only issues a small number of invoices these features are more than adequate, however, things start to get tricky as your company grows:

  1. It’s hard to stay on top of too many overdue invoices. Ultimately, to ensure that you consistently get paid on time, you have to systematically follow up on clients with open invoices. With QuickBooks, you don’t know when the last reminder was sent, what your customer response was and when the next action should be. This is fine if you have a handful of invoices, but it’s easy to get lost as the number of overdue invoices grows. 

  2. You can’t escalate a late payment problem to other members of your team. Typically, it’s the role of the finance team to send the first reminders. But if the invoice remains unpaid, you would usually want to involve the account manager or another executive within your company. This is not really possible in QuickBooks because these individuals may not necessarily have access.

In conclusion, even though QuickBooks has helped many businesses become more efficient when it comes to collecting late payments, it falls short when the problem becomes more acute.

Not sure if your company has cash collection issues? It’s easy to spot, just compare the total amount of unpaid invoices to your annual turnover. Acceptable thresholds may vary depending on each industry, but as a rule of thumb, if it’s higher than 15% (meaning that it takes approximately more than 60 days to collect an invoice), it’s probably time to move to find a better solution.

Connect Upflow to QuickBooks to supercharge your cash collection

Upflow is a QuickBooks certified partner, available from the app exchange. The integration is seamless: it only takes a few clicks to get all of your data into Upflow, and all new customer invoices and payments that are added to QuickBooks will be automatically added to Upflow in real-time.

Beyond the QuickBooks features on unpaid invoices, Upflow will provide you with three key features:

  • A deep understanding of your accounts receivable. The most important thing that Upflow's dashboard gives you is a real-time view on your day sales outstanding (DSO) which is the average time it takes you to get paid. You should be comparing this to your payment terms: if they're net 30 days, and your DSO is 60 days, then you probably have significant room for improvement! 

  • Systematic reminder emails. Upflow will help you make your follow-up emails 10x more efficient using its simple reminder system. It allows you to: - Create sequences of reminders that will be sent to customers with unpaid invoices based on the severity of the payment delay. This is called a ‘dunning plan’, it’s a list of pre-configured reminders that you can be tailor to each type of customer. So for example, you can choose to communicate with your large customers differently to your small ones. - Use omnichannel reminders: emails, calls and letters are all prepared for you. We make sure that they will be sent to the right customer at the right time. If the accounting team is not answering, it may be time to reach out to your sales contact there. Upflow lets you do this seamlessly. - Involve your team. Cash collection is a team game, Upflow allows you to keep the right team members in the loop. If a customer enquires about the details of an invoice, you can quickly bring your sales team into the conversation to provide further assistance, correct it immediately, and get paid faster.

  • Clear picture for your Customers. When customers have multiple unpaid invoices, they may lose track of exactly what they owe you. Instead of sending multiple emails, Upflow gives them a clear, consolidated and real-time view on their payment status, based on your overdue invoices in QuickBooks. It’s much easier for them to pay you straight away!

You’re not alone, at Upflow we’ve helped hundreds of businesses to get paid faster. Over time, our team will show you how to improve your cash collection, by sharing best-in-class cash collection strategies that are tailored to your business and your customers.

Stay informed and set your goals

Last but not least, Upflow will ensure your team is aligned about cash collection.

Your finance team may be on the front line, tracking unpaid invoices on a day to day basis. But your executive and sales teams will also be kept in the loop by receiving regular email updates that summarize the cash collection status and reminders to send emails to or to call specific customers. Upflow will help you turn your business into a cash-driven organization.

Like many other companies, using Upflow will help you reduce your DSO and your write-offs and increase your working capital. As a finance team, you will also be able to set and track your goals and report the improvements internally or to your board. You should be following the same ROI based approach like the other areas of your business do. 

If you want to try Upflow for free, simply create an account, and get access to your dashboard in only a few clicks.

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