Hey, everyone! Do you work in accounting? Have you noticed your company's accounts receivable? Be careful! In some cases, unnoticed accounts receivable can become bad debts!
Do you want to know how? Let me show you. We'll start by understanding what accounts receivables are.
An accounts receivable balance is money that a firm is owed for goods or services it has provided but has not yet been paid for. According to the balance sheet, accounts receivable is a current asset. The receivables represent the purchases that customers have made on credit.
A company's accounts receivable consist of the outstanding invoices it has or the money its clients owe it. The payments a business is entitled to receive for delivering its products or services. Accounts receivable, or receivables, are lines of credit extended by companies with terms that require payments within a short period. Depending on the year, it can range from a few days to several months.
Customers are legally obligated to pay their debts, so accounts receivable are recorded as assets on the balance sheet of a company. In addition, accounts receivable are also considered current assets, meaning the debtor must pay the balance within one year or less. When a company has a receivable, it means that it has made a sale on credit but has not yet received payment from the buyer. A short-term IOU [I Owe You] has been accepted by the company from its client.
It is necessary to write off an account receivable as a bad debt expense or one-time charge if it becomes obvious that the customer will not pay.
Most of the time, this happens when companies fail to follow the below steps:
Your customers fail to make a "Promise To Pay".
Your customers did not receive reminders from you at regular intervals.
Most companies do not send frequent reminders through multiple media and follow up with their customers before the due date.
When you see a shortfall in cash flow, you'll look for unpaid Accounts Receivable Automation.
The customers are not required to pay their bills within the specified need.
It leads to confusion and mishaps when you don't maintain a centralized Receivables Management system.
It is possible to overlook the escalations that the customer raised due to their dispute in their invoice, resulting in delayed payments.
Additionally, if more than two people manage your company's accounts receivables at the same time, you may not be able to keep track of who handled the customer. Due to this, you will be sending more reminders in a short period, which will annoy your customers.
You can avoid all these problems by integrating your accounting system with an Accounts Receivable Management System like Maxyfi.
The above services can be implemented by our team for you. This includes following up with your customers, sending frequent reminders, finding disputable sales invoices, and brainstorming the most effective collection strategies to recover your receivables. All these can be automated substantially, and you can grab our tool at the lowest prices in the market.
Reach out to Maxyfi today and collect your accounts receivable before the payment terms.