Managing Accounts Receivable is one of the most time-consuming and tedious tasks for any business. The truth is, it doesn’t have to be that way. There are some very simple things you can do to save money and time on managing accounts receivable. In this blog post, 8 Best Practices for Managing Accounts Receivable are discussed in detail.
What is Accounts Receivable?
When it comes to Accounts Receivable, there are a few key things you need to know in order to properly manage this important part of your business. First and foremost, Accounts Receivable is the money that is owed to you by your customers. This could be from sales that have been made on credit, or from invoices that have not yet been paid.
It’s important to keep on top of your Accounts Receivable for a number of reasons. First, if you let too much money get ahead of you, it can become very difficult to catch up. Second, the sooner you receive payment, the better it is for your cash flow. Finally, if you don’t stay on top of Accounts Receivable, it can start to negatively affect your relationships with your customers.
There are a few best practices when it comes to managing Accounts Receivable. First, you should always send invoices as soon as the sale is made. This will help ensure that you get paid in a timely manner. Second, follow up with customers who are behind on their payments. A friendly reminder can sometimes be all it takes to get them to take action. Finally, consider offering discounts for early payment – this can incentivize customers to pay their invoices more quickly.
By following these best practices, you can save yourself time and money down the road. Managing Accounts Receivable doesn’t have to be a headache – just put these tips into
Why is it Important?
There are a few key reasons why it’s important to manage your accounts receivable effectively:
1. To ensure you get paid on time
If you don’t manage your accounts receivable properly, you run the risk of not getting paid on time – or even at all. This can obviously have a serious impact on your business finances and cash flow.
2. To avoid late payment fees and charges
If your customers don’t pay their invoices on time, you may be charged late payment fees by your lender or credit card company. These fees can add up quickly, so it’s important to stay on top of them.
3. To keep your customers happy
Your customers are the lifeblood of your business, so it’s important to keep them happy. If they feel like they’re always being chased for payment, they may start to look elsewhere for goods and services.
The Best Practices
When it comes to managing accounts receivable, there are a number of best practices that can save you both time and money. Here are just a few of the most important:
1. Use an Invoice Factoring Company: An invoice factoring company can provide you with much needed cash flow by purchasing your outstanding invoices at a discount. This can be a great way to free up some cash quickly, without having to wait for your customers to actually pay their invoices.
2. Offer Discounts for Early Payment: Many businesses offer discounts for early payment of invoices, typically 2-3%. This can incentive your customers to pay their invoices more quickly, which will save you time and money in the long run.
3. Set Up Achievable Payment Plans: If your customer is having trouble paying their invoice in full, consider setting up a payment plan. This will help them get caught up on their payments, while still allowing you to receive some money upfront.
4. Use Automated Billing Systems: Automated billing systems can save you a ton of time when it comes to sending out invoices and following up on late payments. These systems can also help you keep track of payments, so you always know where you stand.
5. Hire A Professional Collection Agency: If all else fails and your customer still hasn’t paid their invoice, it may be time to hire a professional collection agency
Conclusion
Accounts receivable management is a crucial part of any business. By following these best practices, you can save yourself time and money while keeping your accounts receivable under control. Do you have any other tips for managing accounts receivable? Share them with us in the comments below!
