Is that affecting your cash flow, and it costs you bad debts? Then, the solution of these is to have systematic payment plans from the customer. Meru accounting provides Receivable management services in India. A record receivable management merges tied in with guaranteeing that clients pay their solicitations or invoices. Great receivables management specifically adds to an organization’s benefit since it lessens terrible debts.
The organization likewise has a superior income and higher accessible liquidity for speculations or acquisitions. Besides, great receivables management boosts an organization’s professional image.
- Reducing the total balance outstanding
- Preventing any bad debt in receivables outstanding
- Determining the customer's credit rating in advance
- Frequently scanning and monitoring customers for credit risks
- Maintaining customer relations
- Detecting late payments in due time
Plan for receivables management:
1. Clear policies for credit approval.
Set clear policies for credit approval which could include bank reference, trade reference, financial statement, and so forth.
2. Send invoices for customers timely.
It might appear to be self-evident, but if money is to be gathered, at that point, the client must be invoiced. Therefore, it is basic that the receipt is conveyed rapidly and precisely. So, the receipt of your invoice sent is the main sign that an organization gets the productivity of your debt collection system.
3. Accounting for receivables.
Two key methods of speeding up cash collection from accounts receivable are by using factoring and also early settlement discounts, which, thus, helps in easy tracking the payment from customers.
4. Tracking of overdue payments.
So, you can easily track the payments from the customers that are overdue. We also do a regular follow up for receivables through email or a phone call.
5. Making aged Payables report.
This shows the amounts outstanding from each customer and also for how long they have been outstanding. This will, thus, show any breaches of the credit terms.
6. Stay organized by Automation with Online billing tools.
Automating receivables management allows you to link all the systems. This, then, improves workflow efficiency. It also provides a better insight into generating cash flow and customer reports.
Purpose of Receivables Management
For a business, receivables management stands to be the core part as it helps in maintaining the soundness of cash flow. Receivables management does not only mean getting paid on time from the clients or customers, but it also aids in building great relations with them and empower the goodwill of a company. Here are some purposes for which generally a business undertakes receivables management.
- It’s a requirement
Receivables management ensures the financial viability of a business and also ensures the cash flow comes in regularly. Thus, it’s a core requirement of any business.
- Getting paid on time
Every business has the daily requirements of finance like, to run daily chores properly, to pay bills, to pay employees, etc. So, the question is if the business itself won’t get paid from its clients than how would it pay the requirements? Then, here the receivables management comes into the picture to secure financial needs.
- Reduces working capital needs
Generally, a business has to make a provision to fulfill the day to day working capital needs. But, this provision can cut if there is timely payment received from the clients. So, to ensure this, receivables management is a must.
- Happy customers
Receivables management sets a proper system for billing and also getting the payment timely, which is inevitable. It also ensures that this process goes hassle-free. Thus, it makes sure that customers go through a very smooth operation of payment resulting in happy customers. That, of course, eventually means more business!
- Managing relations with customers
Usually, issues with customers come at the time of billing or invoicing, and mainly it is caused by some misunderstanding. But, if a business has a receivable management team separately, such possibilities get eliminated, and good relations with customers can be established and managed efficiently.
- Setting a brand that focuses on process
Receivables management also helps in establishing a systematic process for receiving payments from customers, which ensures smoothness in the process. Thus, it turns a business into a brand that speaks with its integrity and values.
- Lending to customers having better credit ratings
Receivables management deals with analyzing clients and their credit soundness. Thus, it helps a business while coming into contact. It also helps in setting the lending agreement, as many a time a company lends some products or goods on a credit basis. Hence, receivables management can save a business from entering into such doubtful contacts.
- Reducing outstanding balance
A separate receivables management team looks after receiving timely payments from clients and reducing the risk exposure of the business from a defaulting. As a result, the inflow of amount remains regular, which eventually reduces the outstanding balance occurred because of payments due to be received.
Reducing bad debts
As receivables management takes care of receiving payments from clients on a regular and pre-decided basis, it reduces the risk of bad debts and, therefore, saves financial soundness of a business.
So, that’s how if a business opts for receivables management, it can have many benefits and can also focus on its core business with no worry of receiving pending cheques from clients.