If you are a businessman, almost everything you do involves money in some form or the other. You may purchase goods, sell products, pay employees, buy new machinery, go on a holiday, and so on. During all these transactions, there will invariably be some instances when the buyer promises to pay later.
This could be an informal agreement between two parties, or a formal agreement like a loan or a future contract. As a businessman, you want to make sure you get all your payments on time and at least keep track of those who pay late or who default. How would you do that, and more importantly, how do you make sure you are never late on payments?
How to Keep Track of Payments
- Maintain Detailed Records
The simplest way to keep track of expenses and revenues is to record every transaction: the parties involved, the amount to be settled, payment date, payment mode, etc. You can do this on a book but using software makes it easier, like an Excel spreadsheet or more sophistical accounting software. There are also apps for businessmen that automatically remind them of the accounts receivable and due payments.
Account-keeping has been one of the major reforms that the GST Act has brought about in India. Online businesses and others with a large enough turnover have to register themselves on the GST portal, submit all their business and bank details, undergo the GST number verification process, after which the authorities can monitor the business transactions through the GSTIN number.
- Follow the Best Practices for Invoicing
More billing software applications provide various templates to generate invoices, so you can choose what information you should have on the company’s invoices. Once you enter all the right details, feed into a software system that keeps track for you and flags the payments that go past the due date.
If you use a GST software application, it lets you generate invoices, keep tabs, and upload the right documents and invoices when filing tax returns. This works for GST on goods and supplies, and more complex taxes like GST on rent.
- Find Trends
After a few months of thorough record-keeping, you might start to see some trends in expenses and income (or the software will point it out for you). For example, there may be high expenses periodically (like license renewals), or some customers who always pay late. These trends will help you plan future financial strategies, including cost-cutting, payment terms and conditions, etc.
How to Pay Your Bills on Time
Paying your bills well before the due date can work greatly to your benefit: your credit score will be high, you won’t have to pay extra, and you will be mentally peaceful.
- Use Software Assistance
As discussed earlier, a software application can be a great help to give you timely reminders to pay your bills. Moreover, you can automate a lot of regular payments like mortgage, loans, cable bills, etc. such that the appropriate amount is automatically transferred from your account. You should also pay your taxes regularly (monthly, quarterly, or yearly, depending on your status as a taxpayer), and some GST software applications help you do this automatically when the due date arrives.
- Consolidate and Organise Bills
For other cases where you cannot automate payment, keep all your bills neatly organised in a single place. Consolidate bills either by the payment date or by the person you owe money to; this makes it less likely to miss a due date. If you are a businessman, you must produce all the bills of sales to the tax authorities, so you have to keep them safe.
- Add Extra Balance if Possible
If the due amount is deducted from an account where you have to deposit a balance, put in additional money whenever possible so that you don’t have to remind yourself every month, this works best if you are going to pay an amount other than the minimum or full balance.
Conclusion
Now you know better ways of keeping track of your customers’ payments as well as your bills to ensure that they pay on time and you don’t lag on your dues either. For small businessmen who are used to having oral agreements with vendors and customers, using software is a difficult but necessary transition to make. Software services offered by companies like Khatabook are designed specifically for such businessmen to help manage their business online.
