Best Practices To Effectively Manage Account Receivables

Managing account receivables can be a menace without the suitable tools or not following established practices. It can lead to a lack of funds to pay the employees, suppliers, or taxes & levies. As per the 2004 Fortune 500 review, receivables ranked among the top three tangible assets for 75% of the top 100 companies. Surprisingly, receivables rarely receive much attention, except when a severe problem develop

Here are 5 proven ways to manage account receivables

1. Set credit & collection policies

Formulating and sticking to credit and collection policy is important. This helps in managing the receivable system effectively. One of the key aspects of setting the policy is identifying & categorizing the customers based on past records & experience. The subsequent step involves defining the credit period for each category of customers. Procedures need to be laid for the collection, especially the overdue receivables.

2. Sending electronic invoices

With the advent of technology, it has become effortless to send invoices at a click of a button. In the bygone days, customers received untimely invoices. The collection is faster when the customer receives the invoice on time. Invest in software that allows you to send invoices electronically in real-time.

3. Organizing customer information on CRM

Customer Relationship Management (CRM) software can help update & manage customer information in the most productive manner. Most CRM software has the facility to generate text messages, email, or WhatsApp messages. A periodic reminder to the customers can speed up the collection.

4. Easy payment options for your customers

The ideal payment process & method should be based on your customer’s preference rather than the organization’s system. Provide them with multiple payment options like cash, cheque, electronic transfers, to name a few. Implement subscription-based plans in case of recurring revenue from the customers

5. Email payment reminders to customers

Switch to hassle-free new-age cloud accounting software like Quickbook and ZOHO for sending payment reminders to customers. Send reminders to all your overdue customers with one click by setting up a custom email form. Set automatic or manual payment reminders utilizing the above-mentioned software.

Collecting receivables timely can help add liquidity to the business. 

This is one of the most ideal ways to add to your working capital vis-a-vis other options like bank credits, overdraft, or loan against property (LAP).

Join the Business Growth Hack whatsapp private group for remarkable insights to manage and advance your business.

Private Whatsapp Group