Managing accounts receivable
Regular cash flow monitoring, combined with proactive accounts receivable procedures and practices, can help boost your chances of business survival today. Accounts receivable is a critical piece of the cash flow management process because it represents the money owed to you for goods or services. The faster cash comes into your business, the better.
Due to the disruption of COVID-19, businesses of all sizes are making efforts to adjust their receivable practices and policies to their benefit. While this sounds like a logical approach to follow, it is important to remain flexible and responsive to your customer and supplier needs to maintain relationships, and prevent unnecessary strain on your supply chain.
Try to implement some of these common techniques to improve your cash flow position:
- Double-check invoices to prevent errors and inaccuracies.
- Offer early payment discounts.
- Send invoices to your customers faster.
- Develop a receivables collection policy and follow it.
- Conduct a monthly review of your outstanding receivables. Review “aged accounts”, which are accounts conforming to accepted periods of 30, 60, or 90 days from the date of the sale, and calculate any interest charges that have accumulated.
- Call customers with overdue accounts. This will not only to prompt them to pay but to help maintain strong business relationships with them.
- Look for other local businesses to collaborate and innovate with to keep revenue flowing.