In simple terms, accounts receivable management is the means for collecting money that is owed after extending credit for or agreeing to provide goods and services. During downturns in the economy or when otherwise strapped for cash, businesses typically have working capital trapped in receivables that are unpaid or not paid on time.
Use these tips to rescue your business cash flow with accounts receivable management.
Accounts Receivable Management Procedures
The typical A/R department consists of a number of responsibilities for liquidating receivables. These include:
- Establishing payment terms
- Invoicing regularly
- Recording payments
- Running aging reports to determine unpaid invoices
- Following up on unpaid invoices
As you can imagine, if these duties are not tended to, then your customers are, in effect, getting your goods and services without paying for them.
A/R Clean Up to the Rescue!
Instead of giving away your hard work, use these tips to clean up your receivables and increase your cash flow:
Use Automation: If available, invest in technology that will help automate the accounts receivable process. At the very least, consider using calendar reminders to remember to invoice regularly, run aging reports and follow up on old invoices.
Streamline Your Process: Organizing and streamlining A/R is helpful for proactively discovering those clients who aren't paying on time. You'll have a clear picture of any changes that can be made to prevent late payments.
See also: What is the B2B Collections Process?
Keep Customer Data Current: A spreadsheet or CRM system is helpful for maintaining an updated database of customer information and accounts payable contacts. If you need to follow up, you'll know exactly who to call.
Audit and Adjust: If your payment terms are too lax or your credit policies are too lenient, only you can make the changes needed. Run audits to figure out who's getting away with not paying and why.
Work with a Collections Company that Honors Your Reputation and Clients: A client who pays late may still be a good quality client with various other reasons for not paying on time. If your accounts receivable department simply doesn't have the resources to follow up or figure out why it's imperative to work with a collections agency that still treats your clients well.
Enterprise Recovery LLC accounts receivable and collections specialists are required to understand your business, your industry, and your clients to help protect your hard-earned reputation and client relationships. Learn more about how we can help clean up your A/R and rescue your cash flow by clicking the button below.
