How to Automate Your Startup’s Receivables Management
It’s a good feeling to automate a task. It saves you time and avoids some worrying. In this article, I go through some options for automating your startup’s accounts receivable management, what can and can’t be automated, and what shouldn’t be automated.
Options for automating with software
QBO recurring invoices
If you are using QuickBooks Online Essentials, Plus, or Advanced, it’s easy and simple to create recurring invoices automatically.
You can do this by going to the gear icon in the top right and clicking on “Recurring Transactions”.
Then, you choose “Invoice” for the type of transaction.
As you can see from the image below, the Recurring Invoice set-up looks very similar to a classic QBO invoice.
Bill.com is a great solution for bringing all of your A/R and A/P into one place for creating, reviewing, and sending invoices and bill payments. I don’t typically recommend Bill.com to startups because the ideal package costs almost $1k per year and doesn’t provide as extensive automations as I would like. You can accomplish the same through other softwares, reminders, and processes for many hundreds of dollars less per year.
As you can see from the image above, you would need to purchase the “Corporate” package in order to set up Automations. If you have a high volume of invoices and payments, Bill.com may be your ideal solution because of their easy automations, organization of data, and approval workflows.
Zapier automations and reminders
For the majority of startups, I suggest utilizing good-old Zapier!
Since Zapier lets you plug right into the API of softwares, you can usually do much more than other automation softwares.
Unlike my last article, I’m not going to show you exactly how to create Zapier automations (Zaps). If you want a walk-through on creating Zaps in Zapier, head over to my article about Automating Your Startup’s Bookkeeping.
Options for delegating
This one is simple: If you have too much manual work that can’t be automated, get someone to handle it for you! Shinys handle your bookkeeping, accounts receivable, accounts payable, cash-flow forecasting, and many other financial operations responsibilities. The Shiny packages are tailored specifically to startup founders who don’t want to worry about their financial operations.
Bookkeepers and Controllers
Another option for delegating is to bring someone in-house to do the work. If you hire a Bookkeeper, you can usually have them handle your A/R management as well. This option will likely require more oversight and it would eventually make sense to hire a Controller to oversee your Bookkeeper(s).
When you can automate your A/R
It’s very easy to automate sending invoices if they are for the same amount and are sent on a standard schedule. That’s when the QBO Recurring Invoices option is best utilized.
QBO recurring invoices
As mentioned and shown above, Recurring Transactions in QBO can save you time and worry by automatically creating and sending invoices.
The main issue that arises with these invoices is that you cannot add variable fields, such as the current month to the description of a line item.
If you want customized recurring invoices, like most of my clients do, Bill.com or Zapier might be the answer.
Automated and Customized Invoicing via Zapier
To get the best of both worlds, automated and customized invoices, you can utilize one or two Zaps in Zapier.
My preferred process is to have just one Zap pull information from new rows in a Google Sheet and create new QuickBooks Online invoices from them, marking them as “Send Later”. I pull the information from a Google Sheet because most invoices being sent are for different amounts each month.
If all you need to customize is the description of the invoice, like the current month, then you could set up a Zap that triggers on a specific schedule and pulls the current month or other time-based data and inserts it into the description of an invoice before creating it.
If you want automate the process to the point where you don’t touch it at all, you could have the invoice numbers stored in a Zapier Database and then create another Zap to send those invoices on a specific day each week.
To reduce potential errors, I prefer to have recurring reminders every week to review the invoices. Then, I send them out manually.
Automating invoice follow-ups
Unfortunately, QBO doesn’t have an option for automatic follow-ups for overdue invoices without utilizing an outside software.
This is where Zapier comes in clutch again, with the ability to pull invoices from QBO and send reminder emails to the customers through QBO.
An example of a Zap you can create for this is to look up invoices in QBO once a week and resend invoices to clients if they are overdue. Please note that this Zap may require you to have a separate database of invoices in Google Sheets for proper invoice lookups, which would require a couple of other Zaps to be running.
When you can’t automate your A/R
If your invoices need to be created at random, then it may not be possible or make sense to automate the creation of the invoices.
You may not be able to automate your receivables follow-ups if you are running a service-based business. A lot of the time in service businesses, invoices are not paid by their due date because of special agreements. If you create an automation that sends automatic invoice reminders, then your special-circumstance clients may get confused.
Even when you can’t automate, I recommend creating reminders in Google Calendar, Zapier, Todoist, or whatever task management software you use to make sure you do what needs to be done.
When you shouldn’t automate
For large invoices that are created at random times, you probably shouldn’t automate the creation and sending of the invoices. You don’t want to accidentally underbill a big client and then find out 6 months later. As well, you don’t want to overbill a client. It makes you look bad and further complicates things. In very important or special cases, it is usually just easier and safer to do it the old-fashioned way: manually.
I hope you got some value out of this article, and I hope you now have a better idea of how you can automate some of your A/R management. As always, reach out to me if you have questions or want your own Shiny to manage your startup or firm’s financial operations.