Key Ways To Deal With Collections, Receivables and Credit

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A well-managed accounts receivable can be one of the biggest assets to a company.  It can give them the opportunity to leverage cash quickly and efficiently when records are well-kept and when working capital is needed.  For a long time this department was viewed as a basic necessity.  Recently, companies are beginning to look at it in a much different light.  It is becoming widely accepted that the better managed accounts receivable the better financial opportunities a company will have. 

Though a company may deal with either consumers or commercial companies, and therefore either many small invoice balances versus a few large invoice balances, the fundamentals of each are the same.

The Three Steps Of Accounts Receivables Are:

• Process of Remittance- methods of payment or an automatic process will be set up. 
• Management of Credit- This will include informing client of policies, checking credit and getting approval as well as maintenance of credit. 
• Collecting- This step can include technology, different techniques as well as ways to motivate or monitor both external and internal agents. 

It’s important that you don’t underestimate the role that great customer service plays in any of the above processes.  Having a good relationship with the client throughout can help to speed the process up.  It’s a good idea to incorporate a customer focused approach into each of the above steps for accounts receivable. 

Not so long ago there wasn't much done on credit, so accounts receivable wasn't as essential as it is to today’s companies.  These days, however marks a difference in how we view cash flow.  A healthy portfolio of companies that have credit lines means the company has the opportunity to collect and increase their cash flow.  Likewise, companies expect to be able to purchase on a credit line and pay as needed so this creates a new way of looking at cash flow.