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Whether you're on your way to successful start up, or just beginning your journey, the process of invoicing and collecting payments can often prove as difficult as getting the work accomplished. Balancing the client relationship and the need for payment begins with understanding the nature and organization of accounts receivable. Entrepreneur.com defines accounts receivable as, "the money due from all customers for merchandise or service delivered on credit'.
Management of this amount, shown as an asset on your company's balance sheet, can either make or break your company. Methods for managing accounts receivable differ as widely as business types, however, processes should achieve three objectives:
Create a daily record of sales and receipts.
Generate invoices and statements on a recurring basis.
Track current and overdue balances on customer accounts.
Setting up your accounts receivable process should encompass these significant issues:
Establish a credit policy and stick to it. Define the conditions under which you will extend credit. How much credit you will give and to whom. Choose your preferred methods of payment, how you will determine credit worthiness for new customers, requirements for deposits, and interest charges on late accounts.
Generally, the frequency with which your bill dictates the frequency with which you will receive payment. Choose your invoicing intervals, clearly communicate billing terms to customers, and consider offering discounts for early paying customers.
Statements serve more than one purpose: sent early, they are a proactive step. They remind customers, and they serve as documentation in instances when an accounts falls into collections.
Reguarly review your customers' accounts, categorizing them as either current, or past due 30, 60 or 90 days or more. Have policies in place to handle servicing of aging accounts. For example, accounts with invoices 60 days past due may not generate new invoices or receive their next shipment. The small business administration advises taking action as soon as invoices become past due based on your company's definitions. This requires a defined policy and process alongside an awareness of "practical and legal steps you can take yo collect what you are owed."
Most importantly, identify a solution for managing your accounts receivable that allows you to automate invoicing, tracking and reporting so approaching issues are quickly identified and resolved.
So now you know how to manage your accounts recievables but the main question is do you have a system in place to manage your accounts receivables and is it working effectively???
Why not let ECCM do the managing for your accounts for you so that you don't have to worry about it at all. ECCM has a proven strategy that has been working effectively for over 10 years and has been maintaining many accounts simultaneously without a sweat. They have a full proof system in place so that the accounts can be managed from the beginning to the end so that it does not reach the debt status, and your account can be apart of it too. If that does not work for you, then why not select a service package that suits your company best? You can choose from the range of service packages that ECCM offers so that it is tailor made to suit your company without having to change anything.
Do not let accounts receivable management get you down, ECCM is just a call away to take all your troubles away.