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What are the Best Practices for Managing Accounts Receivables?
Proper Accounts Receivable management is essential for ensuring that the operations of an organization go on smoothly. The efficient management of accounts receivables is essential for ensuring this process.
It is not necessary that every customer will pay you in a timely manner. Slow payment of accounts receivable can place a strain on the cash reserves of business and affects its smooth flow.
Business organizations are looking for new innovative solutions like accounts receivable services for ensuring smooth business operations.
Steps to improving the accounts receivable process
1. Use the outsourcing option –
Outsourcing various accounting functions like accounts receivable can ensure that they carry out payments properly at the right time. The third party teams handling outsource accounts receivable will help you in keeping records of the important dates and other information.
2. Use the email option –
Email is a very handy option. One can leverage it for reminding the debtors regarding the due dates. It enables you to send emails at any time to the client, conveying the message without having to contact them personally.
3. Offer discounts –
Offering discounts for making payments on time can encourage clients to fulfill obligations at the right time. This step can also help in improving the relationship with clients.
4. Offer multiple payment options –
In order to speed up the accounts receivable process, you can offer multiple payment options like cash, cheque, online transfer, PayPal, credit cards, etc., to clients.
5. Impose penalties –
In the business world; the customer is king. To discourage customers from making late payments, impose penalties. Information regarding these penalties add in the initial agreements between both the parties.
6. Conduct periodical reviews –
To ensure smooth handling of accounts receivables, periodical review bills from the management. This will ensure that you maintain a proper record and you don’t miss out on any payment.
7. Remain in regular touch with debtors through the telephone –
By sending reminders to debtors on the telephone, you can meet the deadlines.
8. Maintain a proper record –
A proper record of the collections due and collections made should be kept. This can make your accounts receivables procedure systemized and effective.
9. Hire a debt collection service –
In extreme cases where debtors are not ready to make payments; the services of debt collection agencies can be hired. But this step should only be taken when other measures have failed.
These steps have been offered for the benefit of business organizations, but it is up to the higher management to make the final call.
Recommended Read: Getting To Understand Accounts Receivable In Detail
Cogneesol is a leading provider of outsourcing accounting services to firms from all over the world. These services can help in maintaining proper financial records and in future business planning. To get more information, contact us at [email protected] or call us at +1 646 688 2821.
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