Accounts Receivable Management
Managing Receivables is Crucial For Businesses
By Ajeet Khurana
Accounts receivable management… What is the main feature of a successful business? It brings in a steady flow of revenue. Without a steady flow of money your business will stall and ultimately sink into debt and hard times as you live from payment to payment. However, learning to manage the receivables is not too difficult. All that it requires is a little patience and some amount of effort.
What are receivables? They are the bills that are sent out to debtors. This expected payment from customers and clients will be the bread and butter of your business as you will most likely rely on the proper payment of bills to finance any expansion plans or just to pay the plethora of bills that you will face. Thus, managing your receivables efficiently is of crucial importance.
You can’t just scribble down a bunch of numbers onto a little notepad and expect for everything to work itself out. You will need to keep a full sales ledger to track all of your customers’ outstanding debts. No customer should be allowed to escape without payment. Improper management would mean senselessly lost revenue that could have helped your business grow even more.
You will have to make sure that you are managing your receivables effectively. Otherwise you could lose out on a lot of money. There are many accounting terms and practices that you will have to learn if you wish to do it for yourself. Ideally, you should hire an accountant, rather than try to do it yourself. Many large businesses end up devoting tremendous labor into just managing them and ensuring that debts are collected in the proper time frame.
If you want to manage your own account you will have to be ready to spend a considerable amount of time learning all of the ins and outs of the process. In my opinion, doing your own accounts could be backbreaking work. And there is so much that you might end up missing out on. Improper management could result in a nasty disagreement, accounting errors, lost clients, and even possible lawsuits.
However, there is no need for you to stress over all this. It is actually possible to outsource your accounts receivable to a special company that will ensure a steady flow of cash while also preventing you from having to personally deal with angry customers that just refuse to pay what they owe.
Most of these companies will actually act as a type of short term loan provider by buying your invoices at a discount and then earning money by collecting the full amount later. I found it odd when I first heard about it. But later I realized that it is actually a great policy. They will have expertise that you can’t just learn and also have the drive and incentive to actually follow your debts through to the end.
If you mismanage your receivables you will be the one to suffer in the long run. Any business needs to have a steady flow of new money to continue to thrive and improve itself. To make sure that your payments come in regularly, you will have to see to it that your receivables are being managed properly. Otherwise, it could harm your business.
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