|
![]() ![]() ![]()
Expert Answers to Biz Questions Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
All About Your Accounts Receivable
Managing your accounts receivable is not an easy task. Many businesses have died an ugly death because their accounts receivable wasn't balanced with its cash flow. To make the most of your business's bone marrow, you must develop a smart and effective accounts receivable policy - and for that, you need to know all there is to know about your accounts receivable. Why Your Accounts Receivable MattersFor those new to business practices, the accounts receivable is the money you have coming to you. For example, if you provide services to a client but have yet to receive payment, that account is "to be received." Businesses aren't the only entities that have managed accounts receivable; employees who work for paychecks often wait for regular payments; and by doing so, they are maintaining an account receivable. It isn't inherently wrong for there to be a gap of time between services rendered and payment received - in fact, it is business as usual. Conversely, it is vital that you keep a close eye on your accounts receivable because it severely impacts your cash flow. A healthy cash flow means more money incoming than outgoing, but accounts receivable exists somewhere in limbo between earning and spending. After you complete a service for a client, you have expended money, and you are merely waiting to gain it back. However, most clients will submit their payments (ideally on time), so having accounts receivable is a positive business practice; it means you are making sales, which is essential for business success. Which Payment Policies Are ImportantIf it helps, you can imagine accounts receivable as small loans to your clients. You are fronting them the services or products they requested in the expectation that they will pay you back. As with most loans, the sooner they pay you back, the better. Yet, to ensure your clients are quick about making payments, you must enforce payment policies that both parties understand. The following policies have been shown to be most effective at discouraging delinquency and fulfilling your accounts receivable dreams:
|
Small Business Tax Center • Idea Cafe Home • Sign Up • Biz Grant Center • CyberSchmooz •Coffee Talk with Experts • People in Biz Profiles • Starting Your Biz • Biz Planning • Running Your Biz • FREE Trade Publications • Marketing • Financing Your Biz • Human Resources • Legal & Biz Forms • Managing Your Biz • eCommerce • You and Your Biz • Gen X • Work@Home • The Fridge • De-Stress • Send an Award • Send an eGreeting • Yoga @ Your Desk • Web Guide • Idea Cafe in the News • About Idea Cafe • Advertise on Idea Cafe • Contact Us • Privacy Policy • Site Map • Small Biz News
Copyright 1995-2023, Idea Cafe Inc. Downloads are for personal use only, not for resale to others, and may not be reprinted in any form without written permission from Idea Cafe Inc.
DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages. TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.
|