In a company, account receivable management becomes very important when the company must determine the optimal amount of receivables. In addition, receivables must also be managed efficiently, because they involve profits and costs arising from the accounts receivable itself.
A good accounts receivable policy is a policy that can optimize account receivable management by considering the benefits of these receivables. For this reason, account receivable management is needed to manage receivables in a company.
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How to do account receivable management properly
Account receivable management includes credit sales to settlement. This is intended so that all these processes run smoothly so as not to cause accumulation of capital which results in company operations.
Accounts receivable management must start from making careful planning of lending or selling credit activities to the company, controlling the collection of receivables based on maturity and reviewing the policies that have been implemented.
Receivables arise because of a sale of goods or services made on a credit basis. In other words, receivables are debts from other parties in the form of a result of the purchase of services or products that they make on credit. In terms of accounting, receivables represent company demands from external parties which are expected to be resolved by receiving an appropriate amount of cash.
It is common for a company to have receivables because in fact many business actors implement credit payment policies. Although it is actually better to make sales in cash, accounts receivable can also increase business profits.
The importance of account receivable policy
There are also many reasons for implementing the accounts receivable policy, one of which is the limited purchasing power of consumers. With receivables, it is hoped that consumers will still buy or consume the products or services that you offer, so that sales will continue.
However, in practice, of course it is not as easy as one might imagine. Often times there are bad or uncollectible accounts receivable which will have a bad effect on the company. Therefore, the company must create and carry out good and correct procedures related to its receivables for the betterment of the company.
One way to prevent bad or uncollectible accounts receivable is to manage receivables properly and effectively. Then how do you manage receivables effectively? Here are tips that you can use:
Control your company’s receivables in the following ways:
- Filter which customers can get receivables.
- Determine credit risk.
- Determine credit return or discount.
- Establish provisions for dealing with the risk of outstanding receivables.
The following are some things that must be considered in taking a policy in managing accounts receivable:
Providing a Credit Policy
In providing a credit policy, you can determine the amount received, the credit period, special requirements, and the level of spending for debt collection.
Making Credit Standards
Usually a credit standard is the quality of a person’s creditworthiness to make a credit application and is determined by the company. Establishing credit standards requires a measure of quality, namely the probability of arrears by customers.
Determining Credit Terms Credit
terms will usually determine a period of credit given and a cash discount for customers who want to make early payments.
When you have given credit to customers, what you have to do next is collect regularly.
In managing company receivables, reliable accounts receivable management is needed. Accounts receivable management is a process of planning, organizing, directing, and controlling in the form of claims to debtors who carry out the credit.
You can send messages via email, or other media to remind customers to make payments.