Effective B2B accounts receivable management may be only as effective as your policies and procedures. Accounts receivable and collections policies contribute to and protect your cash flow by organizing procedures to follow when extending payment terms and credit to clients. The faster you can collect on invoices, the more reliably your business can plan for inventory and pay vendors.
In corporate accounting, it's not uncommon for an excess of past-due invoices to get put on the back burner due to employee turnover, new accounting software or other challenges in daily operations. Cleaning up or auditing your accounts receivable is a smart idea to ensure those few invoices don't turn into lots of invoices that need to be written off or sent to collections.
As any business knows, when accounts receivables begin to drift, other expenses feel the squeeze. With fewer invoices in larger amounts, more is affected when clients aren't paying on time. One late payment can mean payroll, rent, or other vendors aren't paid on time either. An accounts receivable department could be considered the heart of an organization.
