accounting

Five Effective Steps to Manage Small Business Accounts Receivable

Properly managing your accounts receivable doesn’t have to be difficult. Sure, the process of collecting, tracking and submitting payments can be tedious work. If you have a proper plan in place to manage accounts receivable, it becomes much easier to maintain.

Accounts receivable (A/R) is the money owed by a customer to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. The receivables aspect comes in the form of operating lines of credit, as per the Northshore Advisory. Payment is usually collected within a short period of time ranging from a few days to a few months.

If your business offers safest nation21 payday lenders credit, it is important to have a system in place that manages your accounts receivable. One of the worst things that can happen is not knowing how much you are owed, when it is due and whom it’s owed by. A business runs much more effectively with a system in place that helps mitigate risk. Learn more about debt risk management and checkout latest reviews regarding debt settlement.

 

Here are five effect steps you can start using today to help manage your guarantor loans accounts receivable. When a person makes an application for an unsecured loan, it will be likely that the lender will review your credit file to help with its final decision. As there is no collateral associated with the loan, it is often the case that those with a poor credit history may not qualify. As there are many financial organisations, the rules can vary from lender-to-lender. While it can be assumed that there are Benefits of a Bad Credit Unsecured Loan, but may struggle to qualify for a loan, some may find that a loan can be issued, albeit with a higher interest rate.

Tracking: Whether it’s placing the information on an Excel spreadsheet or using software, it’s very important to track accounts receivable. There are many cost efficient and user-friendly software packages available. The ability to automatically track and monitor an account can save a lot of time and money. Rather than sorting through every account manually, there are alerts that will notify you of a delinquent account. This gives you the ability to take action right away before it becomes a headache for your business.

Terms of Payment: Before a service is performed, a business should clearly state the terms of payment to a customer. Customers should also be aware of the process if they are delinquent on an account. This information should be presented on a billing statement for further clarification. Giving customers plenty of notice tends to help them avoid penalties.

Record Purchases Promptly: Don’t wait to record a purchase. All purchases should be recorded promptly so you have a record of the transaction in the books. Putting it off until later can create havoc. This often occurs when an employee puts it off and accidentally forgets to publish the purchase which will inevitably create an accounting error. The sooner you input a purchase and send out an invoice, the sooner you get paid.

A/R Review: While you may believe you have everything in its proper place, it’s always a good idea to perform a manual review of your accounts receivable. Errors happen. Set up a weekly or monthly time to review or have someone else review the A/R report.

Delinquent Accounts: There are times when collecting delinquent payments is necessary. This is a moment when excellent communication skills come in handy. While you don’t want to harass customers, it’s important to stand firm and remind them of the terms of payment. Then you should notify them of the bill that’s past due. It may be necessary to work out a payment plan if the person is unable to make payment all at once. In more severe cases, it may be more beneficial to work with a collection agency. While it may not be ideal, these companies tend to be extremely effective at collecting payments in promptly.

 

Conclusion:

Managing A/R doesn’t have to be difficult. All it takes is the proper tracking of accounts, clear communications, prompt recording and review, as well as a plan in place to collect delinquent accounts. If you have this in place, you are well on your way to properly managing your accounts receivable. For any other information get in touch with this Best SEO Company available everywhere.