Why Good Accounts Receivable Policies Matter For Your Business
Accounts receivable is essentially the life blood of your business’s income and source of working capital, and it’s one thing you cannot take for granted. In fact, how you run your accounts receivable could determine other performance areas of your business such as customer service results, marketing analytics and sales in general. What does it take to keep the cash flowing in your accounts receivable department and make sure you’re keeping the morale itself at your business high? Technology such as AI based accounting software or database solutions can certainly do a lot to help keep it organized. But having policies in place for invoices and payments is also important, and an accounts receivable management cleveland oh firm can also be beneficial.
Make Sure All Customer And Payment Data Is Completely Accurate And Up To Date
To have an effective accounts receivable management process, you need to make sure you can check all records quickly and know that your customers are being billed accurately. As The Balance explains, you want to make have the right billing addresses, payment method information, and current or past due information handy so you can optimize your bookkeeping. You need to consider how you’re billing and the kind of credit that customers or clients get when they enter into sales agreements, and you should have a well-defined policy on how you’ll award customers credit or extended deadlines on their accounts. Avoiding as many errors and service issues will eliminate disputes and legal issues regarding payment receiving.
Make Sure You Have An Effective Method For Pursuing Collections
It’s important that right from the beginning customers understand when you expect payments to be made, and how they will make them. Sometimes it helps to have a more flexible payment policy so that the customers can pay using methods that are more convenient for them and don’t require certain delays such as receiving checks in the mail or waiting for them to clear at the bank. But when it comes to delinquent accounts, it helps to employ certain additional tactics for collecting payments like the ones the Chron mentions. The first is making sure your customers are getting notices about late payments, and that you’re giving them clear directions on what they need to do to resolve them. Second, while you don’t necessarily need to hire one right away, you should be ready to hire a collections agency in the event they don’t pay after repeated attempts to contact them. If you’re a little short on cash flow and have outstanding invoices, an accounts receivable management firm that offers invoice factoring could buy your invoices to provide you with financing.
The bottom line is you need a proven process to eliminate cash flow headaches and be able to fund your payroll or tax payments. Having a dedicated team manage this can help, or you might leave it up to an outsourced bookkeeping or human resources firm to stay on top of it. But don’t allow accounts receivable problems to build up to where they could put your business in financial jeopardy.