Managing accounts receivable is one of the most crucial tasks in any company. After all, how can a company make sales without getting paid? The good news is that you can do several things to improve cash flow and minimise your chances of incurring unnecessary expenses. You might wonder why this is such an important task and whether anything else could be done to make it easier. After all, is it not enough to have bills come in each month and pay them as they come due? If you are not careful, bad habits with accounts receivable management can snowball into a major problem. In a recent discussion with Whiz Consulting, their senior officials pointed out some ways to manage your accounts receivable in an effective manner. Whiz Consulting is a known name in the field of accounting and bookkeeping. They have been providing accounting and bookkeeping solutions to various types of industries. Whether a small or a large business, they offer quality services to their clients. The senior officials at Whiz highlighted the importance of good accounts receivable and suggested ways to enhance your AR.
Up-to-date invoice system- You have probably heard people say that you cannot manage what you do not measure. It could be even truer when it comes to managing your accounts receivable. If you have trouble getting paid, you should consider getting an up-to-date invoicing system. It will enable you to keep track of recurring charges (e.g., taxes and utilities) and other expenses that your customers may owe you. In addition, business owners should get a system to keep track of outstanding invoices. This will help you avoid making payments simply sitting "uncollected." It will also allow you to take action to collect what you owe. It will help you manage your accounts receivable effectively and avoid unnecessary expenses. You must keep practicing good accounting skills even with an up-to-date invoicing system.
Setting up automated credit control processes- The senior executives at Whiz exclaimed, "Business owners can effectively manage their accounts receivable by using automated credit control processes. The right way to manage receivables is to set up a system that collects payments and validates customer identities. Credit control processes will flag questionable transactions and help you avoid making payments to people who have no right to them. It will help organisations to avoid incurring unnecessary expenses and improve cash flow. It will ensure that the credit limit on accounts is always up-to-date and that the right amount is being given to the right person".
Track and manage paper trails- Another thing you can do to manage your accounts receivable effectively is track and manage paper trails. This will help you track all your sales and keep track of your paperwork. Getting into the habit of electronically filing your paperwork would be best. As a result, it becomes easy to manage your accounts receivable and eliminate events of unnecessary expenditures.
Avoid unrealistic conditions- Another thing you can do to manage your accounts receivable effectively is to avoid letting your customers set unrealistic conditions. Many companies will demand full payment upfront for invoices. This is a very risky practice that could easily backfire on you. It would help if you always negotiate a payment schedule with your customers before you begin the collection process.
Proper tracking- Businesses can stay informed about every detail of their sales if accurate tracking is performed. The senior officials at Whiz added, "The data related to every sale and the tracking of due dates and payment dates provides businesses with a better understanding of the cash to be received from customers."
Proper customer records- The credit application process should be linked to the customer database to ensure accurate customer records. A record of the customer's contact details must be maintained to avoid missing invoices and late payments. Furthermore, a customer database can be used for product surveys, effective marketing, customer analysis, etc.
Apart from the points mentioned above, businesses can adopt several other ways to improve their accounts receivable. An organisation's cash flow depends upon good AR management. When there is a shortage in an organisation's cash balance, AR management is essential to ensure sufficient cash flow into the business. However, business owners are already pre-occupied with multiple tasks, which is why they can miss out on such important business concerns. We at Whiz Consulting can help to improve your accounts receivable without compromising on the quality of services. Our skilled professionals have a strong accounting background and years of practical experience. Our expertise and your innovation can help you to focus on core business activities while our experts manage the rest.