How We Overcame The Hurdles Of Accounts Receivable!!

How We Overcame The Hurdles Of Accounts Receivable!!

Are you aware of the hurdles you'll face to recover your Accounts receivable? Do you know how those hurdles will affect your business?  

Ok ok!!! Don't worry. What if we give you the best solutions to overcome the hurdles and safeguard your business from falling into debt traps? Just scroll down!!  

Firstly, let me brief on you what problems we faced while looking for accounts receivables from our customers, and what common mistakes most organizations will make.  


Accounts Receivable – What difficulties we've gone through?  

The very first mistake we made is that we did not track our customers who need to provide receivables. This led to an unbalanced cash flow. Then we reached the respective customer, but we did not have any strong evidence against him as we did not mention any need.  

Then we started looking at the accounts receivable yet to be recovered. That is when we realized how much cash has remained unrecognized here. That was a great yet costly lesson!!  

From then we started following a few steps to make Accounts Receivable a process.  


Some Accounts Receivable Insights from Our Lesson!  

1. Ensure That You Get A Payment Term  

Getting a payment term is critical for every company that wishes to streamline its cash flow and keep a clear audit of its accounts receivable process. Payment terms are the agreed-upon time range within which a customer should pay for products or services. They are significant because they give a clear payment timetable and can assist businesses in managing their cash flow and forecasting revenue.  

Though your customer is a trustworthy person, you have to get comfortable payment terms from them like Net30, Net45, or Net60, whichever is suitable for their payment cycle.  

Analyze the billing cycle of your customer and plan accordingly. Find the reason for delayed payments from your customer and prepare an empowering strategy, so that they don't skip your payment.  

There are numerous actions you can take to ensure that you get a payment term:  

  • Clearly express payment conditions ahead: It is critical to disclose payment terms upfront when negotiating a contract or completing a sale. Verify that the customer understands when payments are due and the implications of late payments.  

  • Create a formal payment agreement with your customers: It's critical to create a formal payment agreement with your customers that describes the payment conditions, including the due date, payment method, and penalties for late payment.  

  • Payment follow-up: After the payment, the period has been established, it is critical to follow up on payments when they become due. This may be accomplished by automatic payment reminders or regular customer check-ins.  

  • Maintain a clear accounts receivable process: It is critical to have a clear process in place for handling invoices, tracking payments, and following up on late accounts to improve your cash flow and keep a clear audit of your accounts receivable process.  

By following these steps, you can guarantee that you acquire the best payment terms for your company and that your cash flow is simplified and predictable. You'll also have a transparent audit of your accounts receivable process, which can assist you in identifying any difficulties early on and taking remedial action to enhance your financial performance.  


2. Always Maintain A Centralized Accounts  

Though it is a tedious task, a company must maintain its accounts in a centralized way. Also, you should have a centralized Accounts Receivable Management which will help you to know where the cash is struck.  

Also, when you have a centralized Accounts Receivable Management there will be no place for confusion or ignorance. It will also help in the audit of accounts, follow-ups, and the status of the receivables.  

Centralized accounts receivable management system is critical to an organization that wants to simplify its cash flow and keep track of its receivables in an orderly and effective manner. An accounts receivable management system is a collection of methods and practices used by a company to track and recover outstanding customer payments.  

A centralized accounts receivable management system guarantees that all invoices and payments are processed and monitored in a uniform and orderly manner. This reduces mistakes and ensures that all essential data is easily available for analysis and reporting. It also helps you manage your cash flow by giving you and your team a clear picture of your current outstanding amounts and payment dates.  

One of the most significant benefits of a centralized accounts receivable management system is that it helps your organization quickly detect and handle issues with unpaid invoices. You can easily discover late payments or customers who are habitually behind on their payments by having a clear view of all outstanding invoices and payment schedules. This allows you to take action before the situation escalates and helps to guarantee that cash flow remains constant.  

A centralized accounts receivable management system, in addition to optimizing cash flow, offers a clear audit record of all accounts receivable activities. This simplifies tracking and analyzing payment trends, identifying areas for improvement, and preparing for audits or financial reviews.  

Overall, a centralized accounts receivable management system adds an extra layer of protection to your company. You can more easily regulate access to sensitive financial information by consolidating all accounts receivable data into one system, ensuring that only authorized personnel have access to the information they require.  

Finally, a centralized accounts receivable management system is critical for any firm that wishes to control its cash flow and have a clear audit record of its financial activities. Businesses may expedite their payment operations, discover payment concerns in a timely way, and keep their financial information secure by integrating all accounts receivable data into one system.  


3. Monitor Your Accounts Receivable  

Keeping an eye on the receivables that are still pending is a must for all organizations. Review the metrics like DSO, Best possible DSO, Average Days Delinquency, and Collection Effectiveness Index in regular intervals to make sure you don't run out of cash at the last minute.  

One more warning!! If you fail to monitor these metrics, your Accounts receivable gets delayed for a prolonged period, which may convert into bad debts. Those debts are a catastrophe for small-size organizations like us.  

Accounts receivable management is critical for every business that wishes to simplify its cash flow and provide a thorough audit of its accounts receivable process. Accounts receivable are the funds owed to a company by its customers for products or services given on credit. You must monitor your accounts receivable as a business owner or financial manager to guarantee prompt payment, detect and handle concerns, and maintain a healthy cash flow.  

Here are some tips for monitoring your accounts receivable:  

  • Track Invoices: Maintain track of all invoices delivered to customers, including the date the invoice was sent, the payment due date, and the amount outstanding. This will allow you to keep track of which customers have paid on time and which have not.  

  • Set Payment Terms: Create clear payment terms with your customers ahead of time, including the due date for payment and any late payment penalties. This will encourage prompt payment and reduce the risk of late payments.  

  • Follow up on Late Payments: Contact customers who have not paid on time. You can verify the status of payment by sending reminders or calling. This can assist in identifying and addressing any difficulties that may be impeding payment, as well as encouraging early payment.  

  • Evaluate Accounts Receivable: Review your accounts receivable regularly to discover any trends or concerns that might be influencing your cash flow. If you observe that a big proportion of customers are frequently paying late, you may need to revise your payment terms or follow-up methods.  

  • Use Automation: Try automating your accounts receivable process using software or other solutions. This can assist to simplify invoicing and payment collection, decreasing errors, and increase record accuracy.  

You can improve your cash flow and maintain a thorough audit of your accounts receivable process by monitoring your accounts receivable. This will assist you in maintaining a healthy financial position and making sound business decisions.  


4. Don't Let the Communication Thread Break  

This is the most important thing to be noted. When you don't send reminders to the customers at regular intervals, and maintain a record of it, you cannot sue them when they fail to pay you. 

Also, you cannot push your customers to give back your money immediately when you want. You have to send them continuous reminders via message, email, or phone call, and only then you can proceed with a legal letter.  

Your reminders can start your dunning process with gentle reminders and then severe letters and phone calls. You have to emphasize the need to make on-time payments.  

Some organizations will provide discounts or offers to customers who make on-time payments for the receivables.  

A seamless and streamlined accounts receivable process requires effective communication. The thread of communication might break if all parties involved do not communicate consistently and openly, producing delays and mistakes in the cash flow and accounts receivable processes.  

Developing clear communication channels and practices is critical to avoid communication failures. Setting clear expectations for when and how invoices will be received and paid, as well as having a procedure for following up on past-due accounts, are all part of this. Using technologies such as automated email reminders and online payment options which are available in accounts receivable automation can also aid in communication and keep the process moving along smoothly.  

It is also essential to make sure that all parties engaged in the accounts receivable process understand payment conditions and expectations. This might involve holding frequent meetings between the accounting and sales teams to discuss any difficulties or concerns, as well as explaining any changes to payment terms or processes straightforwardly and concisely.  

You can ensure a healthy cash flow and a clear audit trail of your accounts receivable by keeping open and regular communication throughout your accounts receivable process. This can aid in the prevention of mistakes and inconsistencies, as well as the facilitation of timely payments and the general improvement of your financial management.  


5. Promise to Pay and Multiple Payment Option 

A promise to pay is a debtor's pledge to repay a creditor's debt. This commitment can be formalized by a written agreement or verbally, but some record of the pledge to pay is required to guarantee clear communication and responsibility. A promise to pay is a crucial instrument for controlling cash flow and guaranteeing timely payment of accounts receivable.  

It is also critical to give more payment choices to debtors to simplify cash flow and have a transparent audit of accounts receivable. Debtors may pick the payment method that works best for them by providing a range of payment options such as credit cards, ACH transfers, and online payment portals. This flexibility not only makes debtors’ payments easier but may also result in faster payment processing times.  

A thorough audit of your accounts receivable process is critical for tracking payments and collecting all debts. It becomes easier to trace which payments have been made, when they were paid, and which payment method was used by giving several payment options. This data can be utilized to detect and rectify any difficulties or irregularities in the payment process.  

Along with new payment options, it is critical to have a clear and consistent payment policy in place. This policy should explicitly express the payment terms, including due dates and late payment costs, to debtors. A clear payment policy reduces misunderstanding and ensures that debtors recognize their responsibilities and the penalties of nonpayment.  

Finally, a promise to pay and the availability of additional payment choices are critical tools for controlling cash flow and keeping a clear audit of your accounts receivable process. You can assure timely payments, decrease payment processing times, and avoid payment disputes by accepting different payment options and having a clear payment policy.  



Yeah Yeah!! We can hear what you're saying. You don't have much time to do all these follow-ups, right? That's why we developed automation that solves all your problems in 'One Midas Touch'.  

Maxyfi is a SaaS product that can do proper Accounts Receivable Management for you. It all starts with a one-click integration process of your cloud accounting books. We can send reminders, get promises to pay, and follow up with your customers to recover your accounts receivables. Also, you can send customized emails and messages to your customer from our portal.  

No more hesitation! Just give it a try to Maxyfi to maximize your finance. Because we're the world's first simplest Accounts Receivable Automation!

Follow our Maxyfi blogs for more info on accounts receivable. 

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