Calculating and monitoring your lines of credit to customers can make a huge difference in your accounts receivable. For every invoice that you send out to customers, there is a cost associated. Are your customers paying you on time or are they significantly behind? If a majority are behind, extending credit could actually be hurting your business. Below we will cover the basics on how to calculate the cost of credit and share accounts receivable best practices to help you decrease and control the cost of credit moving forward.
Many smaller businesses don’t think they have the ability to maintain in-house collections. It can be an overwhelming task to take on, considering all of the cash you need can get tied up in invoices if not properly taken care of. However, sometimes all you need is a little push to see the benefits of in-house collections. Armed with the proper guidelines on accounts receivable best practices, you may find that housing your own collections team ends up being the best option for your business. Below are three benefits from taking on your collections in-house.
When you have a smaller credit and collections team, it can eat up a lot of time calling customers that are overdue on payments. There simply aren’t enough hours in a day to do all the work, or so it seems. However, what a lot of companies with smaller accounts receivable departments aren’t doing is putting accounts receivable best practices into place. Creating a plan using best practices for collections prioritizes actions, which means you can spend time going after customers that owe you the most. We’ve highlighted 5 of the most important accounts receivable best practices that you can put into place now.
While good accounts receivable looks great on your general ledger, it doesn’t do much when it’s held up by billing disputes. Late payments and disputes can significantly affect your access to working capital, and it only worsens with time. The longer it takes for those invoices to get paid, the more unlikely it is that they will ever be paid. For example, if you allow an invoice to age 90 days, you’ll be fortunate to gather only 74% of the funds to be paid, at 60 days you’re probably only going to collect just 30%, and you can just forget about getting paid if it’s more than 12 months late, because you’re only going to collect on (10%) of those receipts.
2016 has arrived but before we get too far into the New Year, let’s take a moment and look back on some of our most popular blog posts from 2015. We have published hundreds of blogs over the past year , so there is no way you read them all. To help you catch up, we’ve put together our most visited blogs of the past year so you can begin 2016 with some of our most popular tricks, tools, and accounts receivable best practices to improve cash flow and grow your business.
Join us to learn 14 Accounts Payable and Accounts Receivable Best Practices
As the end of the financial year rapidly approaches, AvidXchange and Anytime Collect are joining forces to bring you a webinar on November 4, 2014, that will make your fiscal year-end closing process easier! Anytime Collect is a leader in Accounts Receivable Management and AvidXchange specializes in Accounts Payable, so you’ll learn about best practices for year-end closing from both sides of the General Ledger.