Your accounting software is perhaps more useful than you may believe. We all know you can use it to:
- prepare for EOFY
- pay your staff and manage leave and super
- automatically calculate GST
- run P&L and cash flow reports to ascertain your financial position
- get paid by processing online invoicing
But using accounting software to know your clients
Why would I?
Understanding the behaviour of your clients is paramount to business success. If you don’t have a full picture of your audience, who buys from you, how much they spend and when you have little hope of improving your sales and cash flow.
Who are your best clients?
By running comprehensive sales reports, you can discover who exactly your best clients are, what they buy and how much they spend.
For example, you can create a sales report which will uncover the level of sales to each of your clients.
You can also create more detailed reports which will display all the items or services sold that you’ve recorded through invoices or receipts. There will usually be many options in these reports to drill down further and refine these lessons according to your aims.
The value of knowing your best clients
It’s an oft quoted fact that 80% of your revenue usually comes from 20% of your client base. This is known as the 80/20 rule.
A further point is that it’s often up to five times cheaper to resell to an existing client than it is to clinch a new one.
By capitalising on this information, you can directly target your top clients for upselling, cross-selling, promotions, discounts, and reminders.
Keep these clients delighted through excellent client service and diligent promotion work and you’ll ensure high cash flow and repeat business.
Better yet, once you understand who these clients are and what they buy, you can get a better idea of how to market to similar demographics. This helps you hone your sales and marketing approach with confidence that you’ll gain fruit and waste less time and money chasing new clientele that matches the buyer profile.
Which of your products or services are customers most interested in?
By exploring the sales data in your accounting software, you’ll have a comprehensive idea of what your top-performing offerings are.
Run reports on sales by item and you’ll find a historical treasure trove of information. If you find that a particular item or service outperforms the rest, the mission is clear – concentrate your marketing and sales efforts to promote and cement these top-performing offerings.
On the other side of the coin, you can also understand the least valuable offering according to your client’s sales behaviour. You can then choose to ditch these lines and concentrate on your high-value client offerings.
Who pays invoices quickly and who needs tighter credit control policies?
A vital aspect to knowing your clients is your accounts receivable. Your accounts receivable is simply the money that is owed to you by clients. This debt is usually in the form of unpaid invoices.
If you’ve issued invoices to clients for work you’ve undertaken, yet have not received payment, you have accounts receivable.
By running accounts receivable reports in your accounting software, you have the information is used to understand who your best and worst paying customers are. This can be used to decide how you invoice clients in the future and who you should be paying attention to (for better or worse).
Accounts receivable ageing report
To better understand your clients through accounts receivable, you can produce an accounts receivable ageing report within your accounting software. An ageing report is used to tabulate and classify accounts receivable according to time.
For example, many accounts receivable ageing reports are split into’30-60 days late’, ’60-90 days late’ etc.
by producing an ageing report, you can understand which clients need to be chased, what their business health might be like, and who you need to keep an eye on.
You’ll also know who pays you quickly and in full. You may then choose to loosen credit terms for your early paying clients, and conversely tighten them for the late payers.
You may choose to ask late paying clients for down payments in future or require stricter terms and penalties.
What are your best sales periods?
By interrogating sales data in your accounting software, you’ll also have important insight into when your best and worst times are.
If the bulk of clients prefers certain days of the week or months of the year, you can do a number of things with this information:
- concentrate your marketing during these times to capitalise on the trend
- spread your clients out by incentivising other times or days with attractive promotions or offers
- plan to undertake other business tasks during ebb periods.
Want to take advantage of these client insights within your accounting software? Visit Reckon One to learn more and download a free trial.