Managing a creative agency involves so much more than guiding amazing creative projects. Whether you’re a manager within a large agency or a creative entrepreneur who has to juggle it all, at some point, the job of collections will likely fall into your lap. In order to keep on top of agency cash flow, it’s important to improve your agency’s accounts receivable processes and ensure your clients are paying you on time.
Luckily, there are things you can to do reduce headaches, haggling and the dreaded collection calls with clients. Read on, and get paaaaid.
Maintain Strong Client Relationships
Here’s where your accounting and accounts management teams will work arm in arm. Simply put, clients who feel more like a partner than a paycheque will feel more inclined to pay on time.
Going the extra mile for customers and making them feel like they’re receiving a value-added service will ensure they’ll treat you with the same level of respect. A friendly phone call, or even a small percentage off of a regular payment as a thank-you, can go a long way.
Invoice On Time
One of the best things you can do to improve your accounts receivable turnover is to make sure you’re billing on time. The sooner you bill, the sooner they can pay. And the best time to get your client to pay up is when they’re still basking in the afterglow of a beautifully completed project.
Timely billing can be a challenge for smaller agencies who don’t have a full-time accounting department or bookkeeper, but there are ways you can improve your billing process:
- Bill often, rather than waiting until you need to tackle a monster-invoice.
- Ensure your team is keeping their time entries up to date.
- Be consistent. Bill on (or around) the same day each month, so clients will come to expect it.
- Be accurate. Whether your invoices are highly detailed or simple statements, accuracy is paramount in ensuring your clients trust you.
Providing your clients with timely, accurate invoices builds trust and confidence, and sets the precedence for timely, accurate payments.
Include Payment Terms
Create an agency-wide plan for payment terms, and commit to it. Requesting payment within Net 30 or Net 60 days are the most common terms, and many agencies include a late payment fee as well. Late fees are usually a percentage of the original invoice amount. By laying out these terms in advance, you’ll make life easier for whoever is making–and receiving–collections calls.
Use Cloud-Based Software
Using cloud-based accounting software such as QuickBooks make it easy for agency leaders and your accounting team to access your financial data from anywhere. Cloud-based software makes it easy to send invoices and follow-up reminders via email.
The other beauty of cloud-based software is that they’ll allow you to automate repetitive tasks, and offer integration with other software programs. Function Point allows for an integration with QuickBooks, meaning once your timesheets are entered, you’ll be able to invoice easily without needing to re-enter data. Other cloud-based programs like Receipt Bank allow you to include company expenses on invoices. Connecting your software improves accuracy, making it easier to invoice and track payments.
Make Paying Easy
Provide multiple ways for your clients to pay, making it easier for them to match what their accounting department prefers. Whether it’s EFTs or online credit card payments or keeping it old school by accepting cheques via carrier pigeon, it’s important to meet your clients with the way they’d like to pay.
Stripe or Paypal are great ways to make payments easier for your clients. They come with a fee but they’ll make getting paid easier and there’s a host of other integrations you can use to track your Finances.
Switch to Retainer-Based Billing
Agencies that provide retainer-based services charge the same monthly bill, making it more likely that clients will simply automate their payments. It will also cut down on any haggling over line items because you’ll already have an agreement in place. Looking to get started with retainer-based billing? Check out our tips and mistakes to avoid.
Always Follow Up
Collections calls are never enjoyable, but if you’ve followed these tips, you’ll make the process a bit less painful. More often than not, a missed invoice is an honest mistake, and your clients will appreciate the reminder. In those awkward situations where a client is avoiding payment, you’ll reduce the hassle and haggling by having provided detailed, accurate invoices and clear payment terms.
Author: Brittany Coulter
Finance & Business Operations Manager
Brittany keeps the inner workings of Function Point ticking in her role in Finance and Operations. A BA grad from UCSB, Brittany has worked in Finance with non-profits, international tourism, and government agencies. When she's not tweaking excel sheets, she'll be busy adjusting and finding her focus on the yoga mat.