Today I’m answering the question: how do startups collect accounts receivable checks when their offices are closed due to covid? This is a question we’ve been getting a lot. Most startup offices are closed due to the pandemic. A lot of our clients are not able to collect the checks that their clients have sent in to pay for their accounts receivable.
Here are 4 ways you can collect your accounts receivable payments:
Turn Physical Collections into Digital Collections
So the first way is to switch from physical check collection to digital check collections.Forget the checks altogether and use either Bill.com, QuickBooks invoicing, or Stripe. Note, Stripe has a pretty good invoicing tool, but Stripe specializes in collecting credit card payments. These are just a few suggestions. There are many tools out there that you can use to turn checks into digital payments. Do your research to find the best tool for you.
It will make your life so much easier. It will also make your accountant’s life easier because sometimes with checks, especially when they’re deposited in the mobile check apps, or in the bank apps, they don’t have the check image in them.
And we, as accountants, need to see the check image so that we know which client paid you. Let’s say someone sent you $10,000. If we don’t have that check image, we don’t know who it’s from, which makes the accounting difficult.
So my first preference by far is to just turn all your collections into digital collections. It’s not going to take a lot of work. It’s so much faster. You’ll save so much more money on your accounting because you won’t be handling a bunch of paper checks.
Drop by the Office
Now, another option, keeping COVID and employee safety in mind, is to just drop by the office every once in a while, like once every two weeks. There is not going to be that much of a buildup in accounts receivable and checking coming in that’s going to hamstring your business. So dropping by the office is a pretty good solution.
Use a Bank Lockbox
The third solution, and probably my second favorite is to use a bank lockbox. A bank lockbox is a de facto mailing address that your bank will create for you. It is like a PO box that exists at the bank. You then give that mailing address out to your clients. They will then mail their physical check to that address and the bank will deposit it automatically. And the best part, because it’s getting deposited at the bank and not through some mobile app, the bank will have the check image through the lockbox and that will make your accountant’s life a lot easier and happier.
So if you are not going to use digital collections, I recommend using a bank lockbox. It just makes things so much easier.
Other Integrations to Replace the Lockbox Functionality
The fourth way to collect your account receivables is to use another integration that replaces the lockbox functionality. There are a couple of other tools out there that connect to physical addresses. A virtual address vendor called Earth Class Mail is a tool that a lot of startups use to collect their mail. They have an integration with a couple of invoice collectors. Invoiced is one of them and they will scan that check and replicate the lockbox functionality.
In closing, I would just prefer to give the bank’s address out. It just cuts out the middleman, it makes it a lot easier, it’s a lot cheaper, there’s less opportunity for weird stuff to happen. For example, the wrong check getting deposited or something that’s not a check to try to be deposited. But the Earth Class Mail integration with some of the online tools is the fourth option.
So again, just to recap, try to make your collection digital. It’s so much easier for everybody. If that doesn’t work, do the lockbox. If that doesn’t work, then have your employees drop by every once in a while and if that doesn’t work, we’re on our fourth option, use Earth Call Mail integration. Hope that helps.