Managing receivables – the money coming into a business – is critically important. Without efficient management of cashflow, a business can suffer enormously. It requires greater outside funding through overdrafts or lines of credit from willing banks, and if those aren’t forthcoming, then a cash crunch is a frightening reality. Accordingly, managing receivables well is an aspect of any business that cannot be mismanaged.
Here are some tips on how to manage receivables better than before.
Establish Better Client/Customer Relationships
Depending on how payments are processed and received, establishing good relationships smooths the way to faster payments being made. Whether dealing with consumers or businesses buying from the company, getting cleared funds sooner always helps to reduce any bottlenecks.
When chasing business customers through phone calls, it’s important to keep in touch with them and establish a good rapport. This leads to improved lines of communication. Sometimes, when a business is having trouble making all its payments, it will prioritize the ones with which it has the best relationships. However, even if your receivable is delayed, honesty from both parties is helpful.
Use Better Receivable Systems
Rather than trying to do it all alone, there are receivables management systems that can make life easier. Deluxe provide systems that assist their clients in collecting funds and getting them cleared in their checking account sooner.
A focus on paperless transactions includes remote deposit capture systems where the business can use an app to scan a check for deposit. From there, check processing already commences even before the check has been physically presented at their bank. Regular checks from known parties are also given a higher priority because they represent a reduced risk of fraud and other concerns for financial institutions.
The ability to handle more transactions at the office and not need to make repeated trips to queue up at the bank is a godsend for busy accounting departments. There’s too much going on to lose an employee for an hour or more just to get an urgent check presented right away.
Better Risk Management
With improved financial systems that provide access to a company database, it’s possible to be alerted on payments due from suspect companies. Being able to perform a scan and get alerted to any potential problems before issuing a first invoice avoids the company getting in too deep. As a result of this type of business intelligence, the rate of fraud and potential financial losses goes way down.
Financial intelligence is also used when issuing credit based on the supposed financial solvency of the customer/client. With proper credit risk assessment policies in place along with real-time financial data scoring, companies can protect themselves from a major financial blunder.
Managing invoicing, credit and receivables better than before allows a business to take advantage of prosperous times. Rather than watching powerlessly as much of the potential earnings disappears through inefficient financial practices and mistakes, companies can strive ahead. Then the finance team that doesn’t often receive the praise can enjoy a well-earned pat on the back.
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