4 Tips to Help Merchants Best Manage Accounts Receivable
For businesses, what’s in their cash account isn’t quite the whole picture. That is where accounts payable (amount owed to service providers) and accounts receivable (amount awaiting a client payment) come in. What money is owed versus what money is being received, can make a business profitable or in the red. That is why it is very important for merchants to manage their accounts receivable to ensure they are healthy and thriving.
If a merchant billed their vendors every hour, day or week, invoicing would become tedious and time consuming for both buyers and suppliers. Instead, merchants typically invoice on a monthly basis and expect payment within 60 days. This billing action represents the value of a month’s worth of work and is best managed on a consistent and routine basis.
Tips to Best Manage Accounts Receivables
Ensuring payments is a crucial part of any merchant’s business and accounts receivable is a large factor in keeping cash flow healthy. Here are 4 tips for merchants to ensure they are on top of their accounts receivables.
1. Track Accounts Receivables
There are many reasons why tracking accounts receivables is smart. It helps merchants remember to bill certain customers, figure out if vendors have made payments on time, limit the chance that a merchant provides a product or service for free accidently, keeps incoming payments prompt, and provides documented proof come tax time.
2. Communicate with Clients
Regular and prompt communication with clients allows merchants to thwart non-payment errors and enhances the relationship between buyers and suppliers.
3. Create Solid Internal Processes
Develop a process for performing accounts receivables and execute that plan regularly. Merchants can designate a day each week to create, print, and mail invoices or even better, send invoices electronically to eliminate manual errors and provide convenience to those making payments.
4. Confirm Receipt of Invoices
Merchants that take the time to inquire with vendors that an invoice was received will avoid billing mistakes and it provides an opportunity for merchants to ask for feedback on a product or service which strengthens supplier relationships.
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