Accounts Receivable—The Business Lifeline

Every business needs to accumulate and then collect their accounts receivable, or A/R.  The sales these A/R represent are the culmination of the business’s profitability; it’s entity.

With the advent of electronic bookkeeping, A/R tracking is relatively easy compared to the “old days” of writing everything down in a list and crossing off items when collected. Every business needs to accumulate and then collect their accounts receivable, or A/R. The sales these A/R represent are the culmination of the business process, the sale.

As businesses progress forward into electronic A/R solutions, it is important to maintain this key benefit from the more old-school ways of tracking A/R, which is the efficiency of writing down notes in one place and having access to all necessary information when the A/R is delinquent.

I suggest establishing an electronic folder using Excel or a similar program that you can reference at your fingertips when talking to a customer. It needs to have all pertinent data, including the invoice number, the amount, and the date. If you make any phone calls to discuss your A/R situation, be sure to note the contact name, date, and any resolution agreed upon.

Another way to expedite collection time is to use a lockbox at the bank.  Collections enter your account faster and time is saved in the office opening mail and then making deposits.

Lastly, be sure your business is set up to accept credit card payment. Some customers won’t deal with businesses that don’t take credit cards. In recent years, credit card companies have developed cards tailored towards small businesses, so be sure to find the credit card company that offers the most benefits to your business. Also, be sure the fee is calculated when determining your sales price.

Happy collecting!

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