From Accounts Receivable To Cold Cash - Cash is the lifeline of any business. Every executive should monitor the payroll and daily workings of the company. It is imperative that an accountant should be scrutinizing and looking for ways for accounts receivables to be paid. The following are some tips on making sure that accounts receivables become actual cash in due time.
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You are here: DIME Home > Finance > From Accounts Receivable To Cold Cash
Cash is the lifeline of any business. Every executive should monitor the payroll and daily workings of the company. It is imperative that an accountant should be scrutinizing and looking for ways for accounts receivables to be paid. The following are some tips on making sure that accounts receivables become actual cash in due time.
Author: Greg Pierce
Date: Dec 22, 2010 - 4:53:18 AM
Cash
is the lifeline of any business.
Every
executive should monitor the payroll and daily workings of the
company.
An
accountant should be scrutinizing and looking for ways for accounts receivables
to be paid.
Here
are some tips on making sure that accounts receivables become actual cash in due
time.
You
are required to have an accounts receivable software on hand.
(See
last paragraph below.) Choose a tool from the software that lets you do a simple
reporting (it should be termed as Aging Report) of accounts
receivables.
This
implement should be capable of reporting cash outstanding in intervals of 30
days from the day the sale was made or the day the service was given.
See
to it that this report can be exported into Microsoft Excel to make it very
useful.
Merge
accounts receivable into related groupings.
Clients
who are single entities have a different behavior from clients that are whole
companies.
Large
corporations usually pay longer because the decision has to go through a lot of
entities.
Commercial
clients also have different payment schedules than government clients.
This
is due to the red tape in government transactions.
Therefore,
the accountant will put clients with the same payment behaviors in one group and
so on.
This
is because accounts receivable manager can formulate a stratagem for reducing
the accounts receivable for each group.
It
is advisable that the accounts receivables that have been there for the longest
time and the accounts receivables that are very large should be dealt with
first.
These are the accounts receivables with the loss at the highest
possible risk.
Front
line managers should be contracted to build up methods that reduce the days
sales outstanding or DSO on the basis of results with particular
sellers.
Probably
the present policy calls for 3 to 4 weeks to go by before information on the
client paying progresses from the Front Line Manager up to the Accounts
Receivable Manager.
But
if you deal with this information promptly that could lessen the time by 3-4
wks.
The
sellers should know about the issues about collection.
From
time to time, the sellers do not know the issues underlying accounts
payables.
Sometimes
only a clear communication regarding the state of things is all that is
necessary to translate accounts receivable into the cash payment that is being
sought after.
Are you interested in account receivable
software? We will help you with your accounts receivable management.
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