Accounts receivables mean the money that is yet to be receivable by the customers. Till the money is paid it is treated as account receivables, it is also known as bills receivables. For the smooth running of business operations, it is necessary that account receivables are paid on time.
Account receivables are one of the key sources of cash flow. Inefficiency in managing accounts receivables can impact business severely and also affect the growth of the business. So, it is very much important to manage the accounts receivables efficiently in your business.
In this blog, we will let you know the tips to manage the accounts receivables efficiently.
(1) Keep clean track of bills: For managing the accounts receivables effectively you should keep a clean track of the bills that are treated as accounts receivables. For this, you should keep track of each sales invoice and the respective receipts, it will help in easy tracking of accounts receivables.
(2) Keep attention on long-pending bills: The longer the payment sits as accounts receivable, the longer it will block cash inflow in business, and later it may also turn as bad debt which will result in the loss of the company. So it is very important to keep a close eye on the long-pending bills.
(3) Tracking the payment performance of your customer: Payment performance of the customer means the average number of days the customer takes to pay the bills, it is also known as debtor collection days. The higher the debtor collection days, the higher business has to invest cash to its unpaid accounts receivables. And, the lesser the debtor collection days means the lower cash have to be made available to use. In simple terms, if the customer takes more days then the cash shortage may result thus higher cash is to be kept in business. So the debtor collection days should be less i.e. faster payment should be received from the customers.
Therefore, it is very important to track the payment performance of the customers so that you can know which customer makes timely payment and which customer makes always delay in giving payment, and based on that you can make a plan accordingly to handle these types of customers.
(4) Make a collection schedule and follow up: You should make a schedule for collection from the customers and also follow up. By this, you can build pressure on your customers and receive the payment early. You can also remind your customers by sending them emails with full details regarding their order and the amount that they have to pay and the due date for making their payment.
(5) Use accounting software to manage your accounts receivables: By using accounting software you can track bills easily and fast, also you can maintain the whole work systematically and can remove the errors. Using an accounting software saves your time and effort which you spend on manually dealing with the accounts receivables. Thus, it is very much advisable to use accounting software like tally which can manage your accounts receivables efficiently.
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