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May 6, 2009 at 3:52 am #964729Up::0
We have a mid sized electrical contracting business and for many of our customers we issue monthly statements. I am wanting to improve our cash flow and would like some advice on when to send out monthly statements at the start or end of each month.
Kind regards
Julianne
May 6, 2009 at 4:29 am #1007625Up::0Julz D, post: 7039 wrote:We have a mid sized electrical contracting business and for many of our customers we issue monthly statements. I am wanting to improve our cash flow and would like some advice on when to send out monthly statements at the start or end of each month.Kind regards
Julianne
Hi Julianne,
In my experience, my clients tend to pay their monthly bills around the 25th onwards. So if I send a statement at the end of the month, then I know I’ve got about 3 weeks to wait for them to action it. I’ve found that if I send them out around the 20th, it gets it on their desk in time for the end of month cycle.
Cheerio,
HelenMay 6, 2009 at 9:58 am #1007626Up::0I have always found statements do little more than act as something to balance the invoices against that have already been issued. Mosy businesses will pay in 30, 60 or however many days regardless of when statements are received. ie, most businesses will currently be sending out payments for either March or April.
Most businesses will enter the invoices into their accounting systems when they receive them and this is what they pay off, not a statement. They will look at what is owing for, say, March and send a cheque or EFT for that total regardless of what the statement says.
Some smaller businesses may pay off statement but I have found most pay off invoices. So, from my experience, whether you send the statements out at the beginning or end of a month will not have much effect on when you receive payment.
May 6, 2009 at 6:41 pm #1007627Up::0From a receivables perspective, we send our statements out on the second working day of the month. They used to be issued for anything over a month old – in the past year we’ve issued them for all balances over $10, and the number of clients aging in the second month has reduced.
We also issue open item statements, not balance forward, so that people can see what is outstanding, or partly paid.From a payables perspective, if I see the word statement, I check to see if there is anything aged (which is usually the banks fault unless I’m being hissy at them), and then I tear it up (which frustrates my admin manager, because she’s quite attached to balancing stuff on it). If it’s current, I’ll have an invoice somewhere, and then there is no risk of me paying twice.
From an accountants perspective, it’s important that you have the GST invoice, and if you pay off statement there is a danger that you may miss holding the one piece of paper that Mr Tax will then want to look at (and in NZ, not sure about Oz, you must have in your possession the piece of paper when you file the return, and if you don’t hold, you must wait until you do before you claim the GST.
Julz D, post: 7039 wrote:We have a mid sized electrical contracting business and for many of our customers we issue monthly statements. I am wanting to improve our cash flow and would like some advice on when to send out monthly statements at the start or end of each month.Kind regards
Julianne
May 6, 2009 at 9:16 pm #1007628Up::0Hi All,
Many thanks for your great advice. It is always comforting to hear from others regarding their experiences and then implement the strategies in our workplace. As a SME we are looking at all avenues to improve our cash flow to survive these uncertain times.
Again thanks for your assistance!
Julz -
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