Accounts Receivable – the money owed to a business by its clients. It’s the collection of all your outstanding invoices that have yet to be paid by your clients. Some companies don’t have accounts receivable because their clients pay for their goods and services as soon as the sale is completed. Their cash inflows are immediate. Accounts Receivable needs to have policies and procedures to guide it. Sending out an invoice does not guarantee payment!
Accounts Receivable reporting generally falls into the categories of Current – Over 30 days – Over 60 Days – Over 90 days – over 120 Days. Ideally you don’t want anything in any category except the current category. Communicating with your clients can help you collect your funds sooner and with less risk of going unpaid. Having processes in place to ensure your client invoice goes to the proper department to be authorized and paid will help you stay current. If you are unsure where to send the invoice contact your client they are happy to get your invoice authorized and paid unless they have an issue with the product or service you supplied. If your client has an issue find out sooner rather than later the longer you leave it the more time and effort it will cost you to follow up and get paid.
If you are having problems getting payment find out why. If there’s an issue with what you supplied your client they will tell you. If the invoice wasn’t received they will tell you. Get a commitment for a payment date and if your client has no issue and they have the invoice but can’t commit to a payment date your client is likely having cash flow issues. If there is cash flow problems try to get another form of payment or a partial payment. Work with your client so you can get paid. Ask you client when you can call back to find out about getting paid, work with your client and keep your relationship on friendly grounds. If it seems unlikely you will ever get paid perhaps your client has something of value they can trade to pay off their debt.
Cash Flow Management will help you identify the outstanding accounts receivable and it will alert you to monies not yet collected. Don’t wait until it’s too late stay on top of your receivables and know when to expect a cash inflow. You’ve made the sale now make sure you get paid!