50+ countries
across the world

Outsourcing leader
since 2008


quality processes

Blog » How to Ensure the Health of Your Accounts Receivable Function?

How to Ensure the Health of Your Accounts Receivable Function?

Last updated: 27 Jul, 2023 By | 6 Minutes Read

Accounts Receivable

In case you’ve been battling with the scarcity of cash flow, and can’t quite manage to determine the reason why you’re experiencing cash flow problems- it’s possibly time to have a more detailed look into your accounts receivable functions. Carrying out receivables management is likely to make the difference between being successful or venturing out of business!

Over 50% of small business owners have troubling accumulating payments, either in any way or by the due date, and it throws a serious wrench into their business’ economic well-being. Carrying out receivables management is the number 1 method, small business owners can strengthen their cash flow and more efficiently schedule and predict their financial situation.

7 Indications of Improper Accounts Receivable Functions

Identifying and addressing improper accounts receivable functions can impact your cash flow management and increase financial risks for the business. Here are seven indications of improper accounts receivable functions:

1. Unaware of money flow:

You ought to be monitoring which invoices are pending every month to keep track of which is due, or overdue. It is advisable to keep with your invoice processing so whenever you’re trying to receive a payment, you possibly can point out any other magnificent account balances also. Maintaining proper accounts receivable practices is essential for effectively managing cash flow.

You must completely note down who often pays late, and the one who has skipped a payment- those are not healthier business associations.

2. You have got no credit plan:

Business owners who function by means of payment terms must have an established policy in a position to assess potential new customers. Even though somebody is willing to employ your company, does not necessarily imply you must instantly acknowledge them- particularly whenever credit is concerned. Perform background verification, a credit rating check, and be aware of sectors likely to make late payments.

3. Unable to keep tabs on payment network:

Keeping up a balanced account receivable implies retaining healthy client and customer associations. Monitoring communication is essential to AR handling. Among the most vital facets of profitable payment, recovery is being in a position to precisely mention earlier contracts as well as interactions. You must leave absolutely no wiggle area!

It’s crucial that you differentiate between customers who basically haven’t been alerted to their overdue payments from customers that are consciously disregarding your payment reminders. If you would like to forward business to collections, or perhaps wind up moving them to the courtroom, obtaining a reported conversation history is going to considerably assist your likelihood of success.

4. Using invoice factoring:

Want funds quickly, so to speak? Clearly, you wouldn’t have cash issues to get started within case you exercised receivables management. Staying sorted and taking productive action to will assist you to obtain payments constantly by the due date. This would inhibit you from experiencing cash-strapped, and rating to invoice factoring. There’s no reason to give up your earned money!

5. Delay in reminders:

You should be following up faster, a lot faster! With every 30-day block, you should forward another, a bit more serious collection note.

6. Excessive overdue payments:

For those who have a lot more late payers as compared to other businesses in your sector, or it requires you much more time than others in your sector to collect payments – you most likely should strengthen your accounts receivable handling.

7. Outsourcing accounts receivable:

Whose responsibility is it to maintain a record of incoming payments and payments owed? Nobody? You’re A/R might possibly consume a great deal of effort in case nobody has possibly been checking it. Don’t worry- you don’t need to hurry out to employ anyone in-house. It’s best to consider outsource accounts receivable services for your buisness.

What sets us apart?

In the event, you can’t locate fairly easily tech-savvy clientele when it comes to account receivable services, make them. Determine a progressive client this season and switch them to a cloud accounting program. As soon as they’re set up and established, make use of them as a case study for your different clients. The recommendations will inspire other companies to make the change as well. Switching over clients to the cloud is likely to be an excellent revenue source.

Do you have an account receivable issue? As a reliable company offering top-notch accounting services, we’d be glad to provide you with a totally free consultation to understand your requirements better. Contact us now, at +1 646-688-2821 or email us at [email protected].