One thing that we’re always telling people about accounting is that a good accountant or bookkeeper can work with clients in any type of business. We like to think of it the same way good computer programmers do. That is, that it doesn’t matter what product or service they’re working with. They treat all of those as “widgets”, and the code they write will work just the same, whether they’re dealing with cars, furniture, or any other product. In a sense, it’s the same in accounting. Dollars are dollars, and numbers are numbers. But of course, every business is somewhat different, and each has its own unique traits and subtleties. One of the broader differences is the distinction between B2C and B2B businesses.
We’re talking, of course, about two general categories of businesses: those who market their products directly to consumers, known as B2C (business to consumer) and those who sell to other businesses, or B2B (business to business). Needless to say, these two groups have to take a different approach to marketing, since they have different target audiences. There will also be some variation in approaches to accounting, again because of the differences in clientele. For example, B2C companies may do a fair amount of cash business, or a high volume of small sales transacted through a POS system. B2B businesses, on the other hand, are more likely to bill their clients with detailed invoices. Here are a few accounting tips for your B2B business.
- Send an invoice.
This seems too simple to even bother mentioning, but it’s an essential step that many companies put off for too long. The key to the survival of any business is its cash flow, and for a B2B business, that means invoicing your customers, and collecting the payments. Of course, you can’t miss sending an invoice. But if you procrastinate and only send out invoices once or twice a month, you’re starting out already behind the eight ball, and almost guaranteeing that you’ll be paid later than you’d like.
- Make sure your invoices are detailed and thorough.
When you deal with consumers, they may not be all that interested in a detailed invoice. But your customers, being in business as you are, are going to be concerned with their bookkeeping, and will want an invoice that details exactly what you’re billing them for. More importantly, you want to be sure that you include some critical information in all of your invoices, including the amount due, terms, date due, and how they are to pay you. It’s also important to constantly make sure that you have correct contact information for billing purposes. An incorrectly addressed invoice is not going to help you get paid on time. And in the case of large, corporate clients, it’s not enough to just get the invoice to their door. If it’s not routed to the right person or group, your invoice can be lost in a black hole for a long time.
- Develop a receivables policy.
It’s important to define your terms of payment, and have a plan complete with procedures of what needs to be done, when, and by whom. For example, collection calls need to be made to customers with invoices that have been outstanding for a certain amount of time. Without this policy, you’ll be making it up on the fly, or, worse yet, some aging receivables may even slip through the cracks for way too long.
- Consider outsourcing.
Accounting practices can get complicated and confusing, and that’s not going to get any easier as your B2B business grows. Consider the possibility of outsourcing it all to a virtual accountant, who already has systems in place to manage the entire process for you.