How to Simplify the Accounts Receivable Process

Accounts Receivable ProcessI recently came across an interesting LinkedIn discussion that asked credit professionals, “What is the #1 item on your wish list for your credit department?”. Most of these responses weren’t “a higher salary” or “bonuses”, but rather tools that they were missing out on. These AR professionals were wishing for a way to simplify the accounts receivable process. With all the great automation tools on the market, it’s not too surprising that many AR departments are simply wishing for the right tools to do their job efficiently. Below are the some of the most popular responses:
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BEGA-US Finds Credit and Collections Success With Anytime Collect

BEGA-US can trace its roots back to Germany, however, it has become an all-American company. A manufacturer of public, residential and commercial lighting, a majority of BEGA-US products are designed and produced in their 120,000 square foot facility in Carpinteria, California. This means that their products qualify to carry a “Made in America” label. Having grown since their inception in the US to include 110 employees, their customer base and accounts receivable department has also grown.
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Halloween Costumes for Accountants

Halloween is just around the corner, and if you haven’t found your perfect costume yet, we have a few ideas. The best Halloween costumes are the funny ones, and what better way to show your humor than by poking fun at yourself. Here are some of our favorite Halloween costumes for accountants. They’re perfect for Halloween night or in the office.

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How to Open a CSV File in Excel

In accounting, and especially since the advent of accounting software, comma-separated value files, or CSV, are a daily struggle. Although these types of files are necessary when importing and exporting information from our accounting software, they can often be very frustrating. The most common problem among downloading CSV files is that many times information goes missing or formatting is changed. The most common solution to this is usually manually reentering the information or fixing it. Manual solutions are never a good fix, which is why we are going to give an alternative solution on how to open CSV files in Excel the right way.
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What to Look For When Hiring an Accounts Receivable Clerk

A lot of a business’s success relies on how good their employees are at their job. Unfortunately, it can sometimes be hard to tell how great a person will be at their job just from the interview. Sometimes we find out that they may not have been the greatest fit after they have already started. This is something that we try to keep to a minimum in the accounts receivable department. If you don’t have a great team of employees there, you’re putting your business at risk. Without a great team, you may find that you have no cash flow.
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How Your Team is Impacted by Accounts Receivable Software: Third Parties

So far in this blog post series we’ve covered how accounts receivable software is beneficial to a lot of different areas in a company, from the C-Suite to credit and collections and even customer service and sales reps. The one area that you probably never thought we’d cover as an area that accounts receivable software can help is actually outside of your company, the third-party bookkeepers, lawyers and collection services you hire can actually benefit from a software product you use internally. Below, we’re going to highlight how.
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How Your Team is Impacted by Accounts Receivable Software: Customer Service

Traditionally, accounts receivable software is viewed as a piece of technology that is only benefited by the accounts receivable department. Although it is true that those on the credit and collections team’s lives are made much easier, they’re not the only ones that see a decrease in workload from the software.
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How Your Team is Impacted by Accounts Receivable Software: Credit and Collections

In our last blog post of this series, we broke the myth that accounts receivable software is only beneficial to those in the collections department. Even those as high up as the C-Suite have a use for accounts receivable software, from pulling reports to escalations of troubled accounts and more. Almost every department in a company can benefit from using the software, such as customer service, IT or hired third parties.
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How Your Team is Impacted by Accounts Receivable Software: C-Suite

Usually the assumption is that accounts receivable software is only truly beneficial to the accounts receivable department. The end users, like collections representatives and credit managers, are the ones that are able to automate most of their tasks and actually save time. While all this is true, they aren’t the only ones that get something out of the accounts receivable software. The whole business is affected by the automated processes, reports and valuable information that comes out of the software.
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How to Spot Good and Bad Trade References

Business trade references play an important role in creating an accurate picture of a company’s payment practices and they can sometimes be your most powerful and valuable source of information when it comes to determining customer creditworthiness. However, just because a business has a trade reference to offer, doesn’t necessarily mean it’s a good one. Here’s how to spot the difference between a good and bad trade reference.
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How to Write an Effective Contract to Ensure Payment

Days Receivable OutstandingWhen you’re extending credit to other companies, writing a contract can be tricky because it means the difference between getting paid on time and not getting paid at all. One wrong word choice, and the entire meaning of the contract can be altered. Instead of flying blindly, here’s how to write an effective contract to ensure payment with every client.
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4 Accounts Receivable Workarounds to Stay Away From

Think about the many different software systems your rely on every day such as CRM, ERP, CMS, EAM, and many others. Are any of these made specifically to handle accounts receivable?

Although ERP has powerful accounting functions and CRM is a great tool for dealing with customers, they aren’t made to specifically help with collecting on unpaid invoices. Because of this, many companies are using workaround or disparate systems, creating data messes and leaving room for error. These kinds of workaround can cost companies thousands every year due to bad-debt write offs, financing costs, and other costs associated to delayed or denied payments. Below we’ve highlighted some of the most common accounts receivable workarounds and the issues they can cause.

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How To Create an Aging Report in Excel Continued

Since we all are in agreement that Excel can get pretty confusing when we start throwing out “IF, THEN” statements, “AND” statements and every other formula that exists, we’ve put together step-by-step instructions for you to make an aging report. For the first six steps and how to set up the Excel sheet, look back at our first post in the series.

Here are the final steps on how to create an aging report in Excel.

Step 7:
In cell F4 we will find out who is not yet due on their invoices. The formula will check for anything in the “Days Outstanding” column that is equal to zero.
In cell F4, enter in the following formula: =IF(E4=0,D4,0)
Drag the fill handler down the column to populate.

Step 8:
The formula for 0-30 days basically says, “Check to see if the difference between today’s date and C4’s date are less than or equal to 30. If it is, input the data from D4. If it isn’t, leave as 0”.
Enter in cell G4 the following formula: =IF(C4<TODAY(),(IF(TODAY()-C4<=30,D4,0)),0)
Drag the fill handler down the column to populate.

Step 9:
The next formula will use an AND statement, which will basically say that if the difference between today’s date and that date in C4 is less than or equal to 60 days AND greater than 30 days, then input the data from D4. Otherwise, input 0.
In cell H4, enter in the following formula: =IF (AND(TODAY()-$C4<=60,TODAY()-$C4>30),$D4,0)
Drag the fill handler down the column to populate.

Step 10:
Under the 61-90 days column, the formula will be similar in concept to the one input in step 9.
In cell I4, enter in the following formula: =IF(AND(TODAY()-$C4<=90,TODAY()-$C4>60),$D4,0)
Drag the fill handler down the column to populate.

Step 11:
To find the unpaid invoices greater than 90 days, the formula is quite simple. It is simply stating that if the difference between today’s date and the due date is greater than 90 to input the data from cell D4. Otherwise, input 0.
In cell J4, enter in the following formula: =IF(TODAY()-$C4>90,D4,0)
Drag the fill handler down the column to populate.

Step 12:
To sum up the value of all of the invoices in each column to know how much cash you have floating among each simply click and drag from the first empty cell underneath the “Not Due” column to the “>90” column. Then press ALT+=

To make this process even easier, you can look into some accounts receivable software options which will automate this process for you. As your company grows larger, and the number of invoices monthly increases, this may become a process that becomes too big to handle.

How To Create an Aging Report in Excel

No one said using Excel is easy. In fact, it can sometimes make you feel like you’re sitting back in high school Algebra with those long string of parenthesis and if-then statements. Instead of trying to pull these statements out of thin air, we’ve put together how to create an aging report in Excel for you. We’ve included all the statements needed to find out who is the most overdue and how much money you’re owed.
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The Pros and Cons of Extending Credit to Customers

On the surface, extending credit to customers seems like a no-brainer since it can be a great way to attract customers and build profitable, long-term relationships with them. But there is more to it than that. Offering credit to a customer, especially a new customer, is not something to jump into in your haste to close a deal. Here’s why:

• 39% of invoices are paid late in the United States.
• 48% of customers delay payments.
• 52% of businesses are asked for extended terms.
• Average DSO (61 days) is more than 2x the average payment terms (28 days) across industries. (source)

As the above statistics show, there is a certain level of risk that you won’t get paid on time if you extend credit. This can cause trouble with cash flow and hinder your ability to meet the organizations financial obligations. Always consider the pros and cons of extending credit to customers before jumping into an agreement.
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