It is preferable to receive rather than lend.

Businesses that prioritise sales are prone to extend credits to clients, give discounts, or bypass payment restrictions to acquire their trust and future contracts—no one focus on working capital management. The company inadvertently provide clients with less finance without concerning capital management.

Some may claim that account management isn’t a huge problem, but it is. If a corporation spends money to satisfy its obligations and the financing charges, it may suffer losses. Your cash depends on the balance sheet rather than being available to invest in growth prospects or enhance shareholder payments.

Some strategies optimise your account management system:

Customer credit approval

While developing policies, solicit feedback from the sales staff. The goal is not to disrupt the sales process but to recognise whether all clients are excellent customers or not. If your clients are enhancing their business or experiencing financial difficulties and want an investment from you, you’ll have to follow your credit approval procedure frequently. A company must have all the updated transactions and balances.

Customer master data

Company master data include credit limits, payment periods, discounts, tax rates, and return policies of all clients. It must also include any other relevant parameters, such as a delivery address, e-mail address and website of clients and company. If your master data shows a payment duration of more days than the actual duration, you could not get the payment on time. So, it is compulsory to update the master data from time to time.

Invoicing

Some businesses fail to generate invoices on time. Manufacturer rebates can be profitable and should be included in a company’s working capital management and cash-flow forecasting. Standardised processes and controls help complete refund invoicing, accrual, collection and deduction of the company. A regular vendor agreement compliance audit is also advised since these audits give essential data and analytics about the company’s adherence to agreements. Administrative staff should update the bills of the company regularly.

Cash application process

It becomes difficult to update the invoices to the correct clients when payments come in from four corners. Regularly updated accounts help to know the dues. It’s hard to track which clients paid which bills. Following up on late payments become a headache.

Collection process

While every company appreciates receiving money, not all companies take a proactive approach to ensure receiving on schedule. A lack of reporting can create misunderstanding in the amount collected and due payment, becoming a headache to solve. Failure to follow the company’s credit or collection procedures makes late payments by the clients. Of course, before your staff follows up on late payments, there must be a surety that the accounts receivable reports are current and no dues remain on that account.

Conclusion

To obtain new business, organisations frequently become engaged in the loop of holding delinquent accounts receivable, extending credit, giving discounts, or disregarding payment requirements. These giveaways eventually restrict you from using your resources for possibilities for expansion, shareholder dividends, or new equipment or goods.

FinConcile can help your company in its growing years. Finconcile’s outsourcing accounts department shares its expertise to assist in the company’s expansion. Our outsourcing services group provides an opportunity to innovate and gain profit.