Managing your Accounts Receivable (AR) and Accounts Payable (AP) can make your business cash flow run smoothly. With a Professional Bookkeeper by your side, you should not need to worry about whether your bank balance is negative by end of month.
Here are great questions to consider:
Can I easily generate all outstanding bills?
Do I know the total amount of my credit card debt and bills dues on a daily or weekly basis?
Do I know the techniques for extending business credit?
Does our current Bookkeeper provide us with these reports?
If you’ve answered ‘No’ on 2 or more of these questions, we highly recommend that you review your Accounts Receivable and Accounts Payable management.
Here are (3) Tips on How to manage your business Accounts Receivable and Accounts Payable:
Tip (1): Manage your Aging Summary Accounts
An aging summary report should provide a list of unpaid customer invoices and unused credit memos by date ranges between 30 days to 90 days. Below a is good example of how your report should look like. In this example, there is a total of $61,000 in outstanding unpaid invoices. To eliminate this problem, sending a swift invoice reminder to your customers could alleviate issues with open balances on your Accounts Receivable.
Ideally, you do not want an outstanding balance beyond 90 days. Any open invoices beyond 90 days is hard to collect. If that is the case, the last resort is to work with a collection agency to assist in collecting funds for your business.
The Accounts Receivable Aging Report
|Customer Name||Total A/R||0-30||31-60||61-90||90+|
|Colorado Mtn. Co.||$35,000||$5,000||$15,000||$5,000||$20,000|
Tip (2): Review your AR and AP Report Periodically
Reviewing your Accounts Payable and Accounts Receivable provide a visual representation of what is owed to your business and what your business owes to your vendors or suppliers. Reviewing both reports periodically provides insight on how you can prepare your business cash in the next two weeks leading into the next following months. Those two reports can help you make sound business decisions of whether your business will be over expensed or under receivables.
Tip (3) Simplify Your AR and AP Process
Simplify your process to make it easier for you and your staff. Utilizing an accounting software can help make a big difference with your business process and help streamline production and focus on the bottom line. A virtual bookkeeping service or an accounting and bookkeeping firm can assist you with implementing your AR and AP processes.
Take control of your accounts payable and accounts receivable today by contacting 365 BOOKSPRO today!