And even if you already have some type of receivables tracking system in place for your business, there is likely room to make it much more efficient. Even businesses that already use financial software like QuickBooks may not be aware of the powerful accounts receivable (A/R) tracking features at their fingertips.
Generally, you need a new A/R management solution if:
- You currently track receivables by hand
- You want to improve the efficiency of your automated A/R operations
- You aren't satisfied with your current accounts receivable percentages: fewer than 70% of accountsare current and many are past 60 or 90 days.
- Your sales volume is increasing or decreasing rapidly
- You've seen an increase in late and/or inaccurate payments
Action Steps
The best contacts and resources to help you get it done
Let your software do it all for you
QuickBooks, Microsoft Small Business Accounting and other popular programs all come with comprehensive A/R management capabilities.I recommend: QuickBooks does it all. Easily generate A/R reports. Create estimates or invoices in seconds with automatic formulas that ensure accuracy. Once info is entered, use it over and over again. Just click on a customer to see all balances and transactions. Customize reports for unpaid invoices, A/R aging and others. See industry-specific solutions for manufacturers, wholesalers, professional services firms, contractors, non-profits and retailers. Microsoft Small Business Accounting, designed for companies with 25 or fewer employees offers a quick, out-of-the-box A/R tracking solution.
Outsource your A/R management system
You can avoid the A/R task altogether by handing it over to outside specialists.I recommend: ABC-Amega's "SoftCall" receivable management solution provides consistent follow-up on outstanding invoices and account reporting. Lason has an end-to-end A/R management solution from the point invoicing details are available through posting of cash received. Diversified Credit Services and GC Services also offer receivables management services. MediBase provides A/R management for health care providers.
Establish a receivables management policy and plan for your business
It's like a business plan for managing and tracking your receivables.I recommend: Start with this simple How Effective is Your Receivables Policy quiz from American Express. Then develop your policy with ideas from 10 Steps to Effective Collections, Avoid Delinquent Accounts and Know the Collection Laws.
Install specialized collections software
Want a software solution dedicated to just receivables? No problem.I recommend: Collect! streamlines collection, administration, reporting, letter writing and other A/R functions. This is the same software that some smaller collection agencies use. Microsoft Small Business Financials is a sophisticated financial management program for companies that need more than basic accounting software.
Fine tune your receivables management system
There are all kinds of potholes that even the best receivables system can encounter.I recommend: Credit-and-Collections.com is a place for people who want to learn more and network with others about collections. The resources section is packed with links that cover every imaginable contingency.
Tips & Tactics
Helpful advice for making the most of this Guide
- To make receivables management easier, don't grant credit. It's not always possible or practical, but some small businesses can operate just fine without granting credit.
- Ask for a deposit. If your business sells products, ask for half up front and the balance on delivery, or request a deposit amount based on standards for your industry. Service businesses might ask for 20 to 50 percent up front, depending on the project, with stepped payments as milestones are met.
- Accept credit and debit cards. While you will pay out a small percentage of each transaction for processing, you also will get paid within days
- Spell out the terms of how you expect to get paid, and what interest or penalties you charge for late payment. State these clearly on your contracts and invoices.
- Request a signed agreement. Use a purchase order or contract that details how much a client will owe and when it will be due.
GreenFlag Profit Recovery by Transworld Systems
Collection agency with 130 US offices and an innovative system that recovered over $700 million at an average of less than $10 per account last year.
www.transworldsystems.com
Collection agency with 130 US offices and an innovative system that recovered over $700 million at an average of less than $10 per account last year.
www.transworldsystems.com
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