As a business owner, it's important to stay on top of your accounts receivable, especially when it comes to business-to-business (B2B) transactions. Accounts receivable refers to the money that your clients owe your company for goods or services that have been provided but not yet paid for. B2B accounts receivable management can be a bit more complex than consumer (B2C) accounts receivable, so it's important to understand how to manage your accounts effectively.
The Wall Street Journal is reporting that the number of accountants and university students that are studying accounting is falling. The long hours, especially during tax season, are turning off young recruits. Enterprise corporations are offering college credits and higher pay to entice more people into the field.
It's time that we review our blog posts from the past year to discover any trending topics for 2023. In previous years, we've used this annual review to learn insights on how we can do better for our readers. Let us know if there's a topic that we can do better for you in the upcoming year.
The objective of an effective collections policy is to ensure that clients pay on time. The policy will also determine what happens when the client doesn't pay within the timeframe of their payment terms. When your business is struggling with cash flow or falling behind on collecting what's owed, it could be a sign that the policy needs updating.
The holidays are a special time when your business breathes out a sigh as one year ends and another begins... Right?
Before that happens, there is much to do! The end of the year signals the looming beginning of tax preparation and budget decisions. It also means closing out the books for the year and discovering delinquent receivables.
If we think of cash flow as important as oxygen to the human body, then accounts receivable is as important as the lungs. When extending credit to clients or invoicing them for goods and services, we're expecting pure, clean cash to flow back into our business. If invoices remain unpaid or the client's credit is unreliable, then the cash flow becomes clogged, effectively killing the business.
If your organization is facing slow cash flow, accounts receivable management may be the problem. Every invoice starts in accounts receivable so it's important to manage the procedures to reduce delinquent payments. Let's look at some efficient A/R practices to get you paid.
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.
The process of collecting what's due from customers can go by several names. Accounts receivable, receivables, A/R, accounts receivable collections, debt collections, and more.
(Not to be confused with accounts payable, which is a different part altogether.)
Many of these terms are not interchangeable but actually define different levels or areas of the process of collecting payments.
If it ain't broke, don't fix it. But do you know if your collections efforts are broken?
If your business has established in-house (first-party) collections, accounts receivable and/or debt collection agency partners, it is still a good idea to ensure you're leveraging the best resources, technology, and vendor pricing available.
