Accounts Receivables

Why Managing Accounts Receivables Could Save Your Business

Posted on 16/08/2018

Why Managing Accounts Receivables Could Save Your Business

For any business firm to blossom and grow, understanding customer demands and meeting their satisfaction is vital. To do this, the firm should maintain a healthy balance between the growing demands of customers and the increase in responsibilities that are bound to follow. This will strike the chords of harmony that will allow for required growth and stability of the firm. And as the customer base expands, so will expand the need for lucid financial accounting that will have to be competently dealt with. An effective system of managing accounts will strengthen the financial base that will serve as the crux of the company’s foundational advancement.

Here, understanding the ebbs and flows of receivables will help in resourcefully identifying the various sources of revenue from which they are either generated or choked. This will also help in classifying the strengths and challenges of the company, providing kaleidoscopic insights to assess and channelize the productivity variants. The need to manage accounts receivable (A/R) only validates itself with these factors. An accounts receivables report can be used as a barometer to assess the financial health of a company in conjunction with accounts payable. It is not only about maintaining a record to tally the income generation, but a system that can competently tackle dimensional issues of productivity is the key to strengthen your financial hold. Some of the perks and perquisites of timely management of accounts receivable are:

  • It can help build stronger bonds with clients and customers.
  • It will help sustain a healthy cash flow.
  • It will help avoid delay in settling suppliers’ dues.
  • It will earn interest in the respective bank account, as an added bonus.
  • It will help in better prediction of cash flows.
  • It will help ward off unforeseen expenditure without much hassle.
  • It will help plan ahead and sketch prospects for the future,

The aforementioned points make up some of the crucial cornerstones that help build and sustain successful businesses. Cash flow management is highly critical for small businesses.

According to a study cited in Entrepreneur Magazine, a bank found that as many as 82 percent of businesses fail due to cash flow management issues. As obvious as it may sound, one of the most effective ways to establish sustainable cash flow for your business would be to proactively manage your accounts receivable. Here are few tips that can help avert cash crunch and ease cash flow:

1. Assessment of Customer’s Credibility:

As much as it is important for a company to bring in new customers, it is also important for the company to study and assess the credibility of the customers.  Before extending credit, a company should have a mechanism in place that is both preventive and curative in nature and helps:

  • Assess the credibility/credit-worthiness of the customer.
  • Provide conditions that clearly define the terms for A/R.
  • Setup repayment timing and options as per remedial conditions.
  • Plan around A/R patterns, with available customer patterns.

2. Prompt and Punctual Invoices:

Prompt and punctual invoices are a pleasure to the eye. Customers dread lingering amidst the uncertainty between the payment gateway and the acknowledgment of payment for a certain service.  On a basic level, promptly sending your invoice reinforces the image of your company as professional and thorough. It also subtly notifies the seriousness you attach to payments. Customers are less likely to delay payments to a company that take accounts receivable seriously.

3. Monitoring Accounts Receivable:

Generally, upon the reception of the invoice, customers are given a certain window to settle the due. Setting up a robust calendar like mechanism that not only tracks individual deadlines but also alerts for appropriate follow-up actions will help forecast the incoming cash flow better. Follow-ups can help reveal oversights, payments lost in the mail or other issues. It can also flag a problem early in the process so that you can determine the best way to move forward with collecting payments.

4. Collections and Corrective Actions:

With a proper follow-up mechanism in place, foreseeing an account heading towards trouble becomes easy. In such a scenario, preventive or corrective measures can be initiated accordingly. There are numerous ways in which delayed payments can be handled. For example, granting a brief grace period in exchange for a minimal interest or a convenience fee. There can be a multitude of scenarios that may ensue along these lines. An early understanding of these issues will help reduce unnecessary ramifications.

Auto-Pilot: Velan Bookkeeping

Caught in a myriad of impending deadlines that has you reeling under pressure? With so many lines of records to keep track of, losing sight of the bigger picture? Sit back, hit the “Auto-Pilot” button and grab that coffee you never could make time for.

Velan bookkeeping, with highly experienced accountants at your disposal round the clock, we cater to all your accounting needs.  From notifying you at the earliest onset of any account heading south, all the way to drawing up sensitive, concurrent remedial measures, we’re in for the long haul. Breaking it down, some of the services we offer are:

  • Timely generation of invoices and effective distribution;
  • Follow-ups and Co-ordination with collections team when necessary;
  • Generation of reports, predictions, and forecasts;
  • Receiving and logging payments;
  • Maintaining efficient archives.

Call us today! And unshackle yourself from the cataclysmic commitment of chasing deadlines.

Phone: +1-860-215-4997
E-mail: info@velaninfo.com

Topics: Accounts Receivables


Why is Monthly Cleanup of Books & accounts Important?

Posted on 02/05/2018

Have you ever wondered why your bookkeeping system is in shambles? We do realize how an organized, clean, well maintained books of accounts depict the health of the business. This scenario arises when a lukewarm attempt is made to DIY bookkeeping, lack of time, incompetent bookkeeper or just failing to get it done.

A sensible way is to start your bookkeeping in the correct way from the beginning. Maintaining the books and balance sheets regularly, or rather at the end of every month will generate squeaky clean books. Considering the fact that you haven’t been updating on a monthly schedule, you need to start all over. Installing QuickBooks or any other bookkeeping software of your choice will be the first step.

For your benefit, here is a run through of bookkeeping tasks to close the books every month. This monthly routine helps you maintain cleaner books, easier business decision making and get tax-ready for the end of the financial year.

Cleanup of Books & accounts Important

Accounts Receivable

Your monthly invoices for work done for clients have to be scrutinized and all the deposits and cash are posted to QuickBooks should be checked. Try to reconcile your accounts receivable report, making adjustments against General Ledger and Balance Sheet.

Accounts Payable

Make sure monthly recurring bills and payments such as, car insurance and loan payments are entered in the respective books of accounts. Outstanding vendor bills and statements must be in line with Accounts Payable accounts and the Balance Sheet. The final monthly checkup of accounts should match your vendors’ records.

Monthly Reconciliation statements

Bank reconciliation statements for your multiple bank accounts, credit card transactions for the month should be updated, printed and filed for future reference. Reconciling loan balances and credit against the monthly statement should also be filed as it would make bookkeeping at the end of the financial year easier to handle.

Prepaid Income and expenses

Check for appropriate journal entries posted for prepaid income and expense adjustments, this would make your bookkeeper’s job a lot less time consuming.

Write off Bad debts

Bad debts that are uncollected are to be written off. QuickBooks has the facility to write off bad debts using the Credit Memo.

Keep an eye on your fixed assets

Any changes in your Fixed assets including depreciation must be updated on a monthly basis.

Validate all checks and Invoice numbers

Check books and invoice statements are generated in numerical order. Watch out for any missing numbers on checks or missing transactions and bring it to records. Any void or cancelled checks are listed and kept on record.

Review Financial statements

Check all postings in the financial statements for errors, missing records and unusual balances. When you identify any untoward transactions, review them and make necessary adjustments. Printing and filing Financial statements and reports are required for perfect cleanup.

Close Books and Backup

The Closing Date feature in QuickBooks permits you to lock the previous months and is password protected as well. When all the adjustments for the month is completed, the bookkeeper closes the books for the month and a backup of the books are done.

Keep tabs on your Budget

Reassess your actual numbers against budgeted numbers. You will understand why there is a difference and how a workable budget can be reinforced and managed for the following month.

The above measures are not only helpful to clean up your books of accounts, but also gives you the confidence of running a healthy business. As we are drawing close to the end of the financial year, well maintained accounts are an advantage for preparation of taxes. One of our services in demand is the cleanup of books for small, medium and large businesses. So, if you are looking for a shipshape financial book of accounts on a monthly basis or at the year end; an added bonus  is your peace of mind. Do contact us for a consultation.

Topics: Accounting , Accounting firms , Accounts Payables , Accounts Receivables , Bookkeeping Services


Simple Techniques To Enhance Your Order-To-Cash Process Efficiency

Posted on 13/04/2017

The order-to-cash/Accounts Receivables cycle in businesses is full of complexities. There are too many interactions that take place in the OTC/Accounts Rceeivables cycle and there is always room for Cash Process Efficiency enhancements in the process. True setback comes from the reliance on the hackneyed manual processes and the absence of a smooth transactional information flow. These are the major impediments that contribute to the inefficiencies and the increased operational costs.

Accounts Receivables

It is established that there are quite a lot of interactions involved in the OTC/Accounts Receivables cycle. It is significant to note that papers are an inevitable part of the information flow between the company and the third party vendors, thus being responsible for the inefficiencies and challenges in the performance. Computerized receivables have been in use for over 5 decades now yet there is an incorrigible reliance on the paper and manual based processes. This is due to the fact that there is no connectivity between the internal functionalities besides the flow of accounting information and sales, inventory, shipping, and receivables. Things get exacerbated when there is an input is required from the customers or other third party vendors during the intermediate processes.

Manual tasks are still being used in bridging the gap between the Receivables processes and the external parties and this imposes the biggest challenge. Though there are software like ERP (enterprise resource planning) are widely used now to provide the integration that is lacking in the manual processes, manual processes are still being used. So, what is the result? A lot of time and labor are being invested in the OTC process, increasing the costs and operational inefficiencies.

How do we go about increasing the Order to cash/ Accounts Receivables efficiency?

You need to build strong connections between all the internal processes and wire them in an automatic process. The only hitch you might be facing is the expenses. Plus, it would also require some rewriting of the interfaces when you upgrade the systems. Luckily, cloud-based solutions increasingly seem to address the issue at hand. Cloud-based solutions also provide much stronger connectivity links between all the participants, be it internal or external. Now, this is more affordable than any other hosted or licensed solutions out there.

Advantages of Automated processing:

  • Customer payments can be accelerated due to instant accessibility of bills and other data
  • Invoice chasing can be streamlined
  • Customer disputes can be prevented
  • The need to re-key order information can be removed
  • Scanning and filing of invoices can be eradicated
  • Storage costs can be reduced
  • Office space will be freed

Should you require help with enhancing your OTC efficiency, do contact at +1-860-215-4997.

Topics: Accounts Receivables , Outsourcing Accounting


Top 5 Practices For Account Reconciliation

Posted on 13/02/2017

Account Reconciliation is very important for CPAs and accounting firms. If they are not handled effectively, they can be time consuming and exhaustive.  Below are some of the practices for you to handle account reconciliation in a whole new perspective:

Account Reconciliation

1. Prioritizing the Balance Sheet

Strategically planning your priority is the key approach. This method is also called “risk based prioritizing.” You need to identify the accounts that have high chances of becoming erroneous essentially. This can be done by ranking the risks as high, medium, and low. Ensure that risks that are ranked high should be given more importance. You can also set times for each category. For example, you can set time frames like monthly, bimonthly, quarterly, etc to process the accounts. You need to thoroughly analyze the accounts both qualitatively and quantitatively to categorize each account.

2. Standardization

You need to identify one “Best Practice” and ensure that you communicate the same to all the departments of the organization and everyone follows it as told. For instance, a company has to standardize the accounts reconciliation process, policies, templates, etc across the whole organization.

3. Monitoring the process

Every member of a team should stay updated with the process going on. This may not work as desired if the team does not have a leader. When we talk about leading a team, it doesn’t mean that this leader should be from management; any person at a lower grade who has the flair to run the show will work. All he has to do is ensure that all the team members finish the tasks on time, follow up with late or unfinished reconciliations.

4. Utilizing technology effectively

Technology these days is playing a vital role in the reconciliation process. Use the software from companies like Trintech, Hyperion, and BlackLine. These companies have designed software which has made the accounts reconciliation process much easier. Some important features of the software include automated balance interfaces, automated notifications for the users, real-time dashboards, etc.

5. Improvements driven by metrics

The leadership in monitoring the processes can also take care of the performance enhancement and improvement by utilizing the metrics available. There are certain metrics that should be reviewed at regular intervals like a person’s or department’s completeness, material reconciling items, and overdue reconciliations. This can also help enhance the above mentioned standardization process.

Contact @ +1-860-215-4997 to know more about reconciliation and handle any of your accounting activities.

Topics: Accounting , Accounts Payables , Accounts Receivables , Outsourcing Accounting


Managing Your Payables And Receivables

Posted on 05/10/2016

Are you having troubles managing your payables and receivables? We have been there done that! As you know, managing your payables and receivables is the most significant aspect of your business in all stages. You may get overwhelmed with the kind of cash you’d have to handle, and keep everything intact and going. Fret not, below are some really simple techniques you can adopt to disentangle yourself from all the payables & receivables hassles.

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Payables:

Managing your payables can be a tricky business. For one, pay all your bills; do not let your unpaid bills linger any longer. The more prompt you are in your payments, the more reliable you become to your suppliers and lenders. Plus, there’s nothing like an unpaid bill that’s a dire threat to the business.

You can take complete advantage of the credit time limit given to you. For example, if your bill is due in the next 20 days, you do not have to pay the bill ahead of your time; rather you can use the cash for something else and pay this bill when it is due.

One other imperative thing you must do is to choose your suppliers wisely. Watch out for the ones that can offer you flexible payment options or that the ones that give you good discounts to pay upfront.

Receivables:

Nobody would have any problem running a business if they get paid for their products/ services on time. But that’s the hitch. Not everyone is prompt in their payments. Yet, you can do several things to collect the receivables efficiently:

  • Invoice your customers promptly. Do not procrastinate in sending your invoices, as it is quite obvious that your payment will be procrastinated too.
  • Do not give credit limits to your customers unless they are trustworthy. Enable COD (cash on delivery) for the customers; this will wipe out the painstaking process of following up for payments.
  • Offer lucrative discounts for the customers who are regular with payments. This will also give them a chance to make the payment then and there.
  • You must entail your customers to pay a deposit amount to use a product/ service if the invoice amount is huge.

Managing your payables and receivables can be easier if you outsource this to somebody who is experienced at the same time cost effective; on outsourcing to reliable hands, you can make use of the opportunity to concentrate on better things like working towards expanding your organization. Contact at +1-860-215-4997 to seek more information on Account Payables and Receivables.

Topics: Accounts Payables , Accounts Receivables