Accounts Receivables collection is a lifeline for a small and medium business. It amounts to a significant portion of a business’s assets and plays a crucial role in cash flow management where even a small amount of funds that are held back can take a toll on the cash flow and working capital for an SMB.
An inefficient Accounts Receivable process can result in raising debt, cash crunch, and investor distrust eventually can de-rail a business. This is why no business can afford mismanaged Accounts Receivable. However, most of the business runs into collection problem either due to lax Accounts Receivable policies, inefficient collection mechanisms or management problems resulting in cash flow problems that can lead to never-ending cash crunch.
Signs of Inefficient Accounts Receivable:
At Outsourced Bookkeeping, we have worked with hundreds of businesses who had faced similar problems. And with our automated and optimized Accounts Receivable Services we had been able to help them improve their Accounts Receivable collection, cash flow and working capital.
Having worked with multiple businesses, we would like you to know that an Accounts Receivable all of sudden doesn’t necessarily translate into a cash crunch. There are many signs which indicate an inefficient Accounts Receivable. In this blog here we are going to list out these signs which come out as common Accounts Receivable problems faced by businesses across different sectors. And then we will show you how automation can solve these problems and how Outsourced Bookkeeping can help you reap rewards from automation. Read on:
Common Accounts Receivable Problems Faced by Businesses:
Unsent invoices: In cases when the accounting resources have too many tasks at hand they might fail to audit and make sure your clients receive regular and accurate invoices for timely payments. Unsent invoices can be huge problems and can take a toll on your cash flow if not rectified immediately.
Missed payments: The clients may neglect or forget invoices and fail to pay your bill. This can happen due to a variety of reasons ranging from failure to manually follow-up, data entry errors or revision to the account details or a lack of an efficient and streamlined Accounts Receivable system in place.
In an effort to choose more sales and revenue, small and medium businesses ease up their Accounts Receivable terms and conditions resulting in lax policies that ultimately cause missed payments from clients, according to our Accounts Receivable Experts at Outsourced Bookkeeping. While certain payments are hard to collect if these problems consistently happen it’s time to have a hard look at your Accounts Receivable Process.
Bad debt: Often the most common and also a glaring problem that plagues every business due to tax Accounts Receivable is bad debt. According to research, the longer it takes to collect your money tougher it becomes to collect your money i.e. a missed payment becomes a non-payment which overtime pile-up to become bad debts.
Cash flow problems and cash crunch: While missed deadlines create cash flow problems, over time they become bad debts and a business naturally spirals down to cash crunch. As a resort, most businesses choose high-interest loans which further can deteriorate the business if sales and revenues goals are not met.
How Automated Accounts Receivable Can Help Your Business?
Data entry problems that cause errors, slow and tedious invoice processing, and lax customer services and failure to follow-up and all the other Accounts Receivable problems spring from streamlined operations and lack of visibility and this is where automation of Accounts Receivable can help.
Automation is a weapon that can help Accounts Receivable automate the time consuming and repetitive tasks giving your resources to focus their efforts on other aspects of Accounts Receivable that require manual intervention and assistance.
If you are a small and medium business looking to improve your Accounts Receivable process for better cash flow and improved financial position, then here are 6 reasons why you must here are 6 why automation must be the first step:
Improved accuracy and streamlined operations: Data entry errors, missed or unsent invoices or other oversights and errors are common problems a manual Accounts Receivable is plagued with. By automating you reduce the errors, drastically cut down the total time spent on an invoice, by streamline AR from end to end.
More time for core tasks: With automating tedious, time-consuming tasks in AR, and streamlining operations your staff gets more time on their hand to help them focus on better tasks like analysis and reporting to identify and present better opportunities.
Better customer service: With all the tasks performed accurately to the tee, your AR staff is now better equipped to help your clients with any payment issues or problems by spending more time on customer service.
Faster payments & better Cash flow: With automated tasks and your staff manually following up and making sure the payment is done within the deadline, you benefit from faster payments. And faster payments help you meet your cash flow requirements in advance giving you ample space and scope to plan and invest in your growth.
Simple & easy legal compliance: When it comes to Accounts Receivable different companies can have different requirements making manual AR a complex task. With automation, you can set up your system with guidelines and local legal compliance requirements making it a single touch point for simple and easy global invoicing.
However automation is only a weapon. Without a solid AR strategy and plan, businesses cannot reap the full benefits of AR automation. Crafting a customized Accounts Receivable process in coordination with accounts payable with cash flow and working capital goals in mind is crucial for any business to benefit from Accounts Receivable and this is where back office accounting firms like Outsourced Bookkeeping steps in. With a team of Accounts Receivable experts who can craft you a customizable Accounts Receivable strategy and with a complete stack of automation tools and software, we provide Best Accounts Receivable Services to businesses that are looking for outsourced Accounts Receivable Services. For more information on our Accounts Receivable Services, you can contact us here: https://outsourcedbookeeping.com/