It is extremely important that business owners are regularly reviewing their Accounts Receivable aging summary in their business, says Edmonton bookkeeping. Not only can they ensure the accuracy of the information through regular reviews, but it can also help business owners use the statement to collect money that they are owed in their business. This is extremely important since running out of money is the second most common reason why Canadian businesses fail. By being able to proactively collect money in their business, business owners can avoid this situation.
By regularly reviewing their Accounts Receivable aging summaries, entrepreneurs are able to become very familiar with them in order to be able to easily see common errors. Errors that business owners should watch for include negative numbers on their AR report. Edmonton bookkeeping says that a negative number typically indicates that an entrepreneur has received a deposit or has been overpaid. If a business owner can verify that this is not the case, it often means an entry error in the accounting software. It usually means that a business owner has entered a payment, but not applied that payment to an invoice. They can easily go into QuickBooks, ensure the payment gets applied to the right invoice and it fixes the air.
Another way that entrepreneurs can ensure the accuracy of their Accounts Receivable aging summary, is by reviewing them to ensure that the list of clients that owe money include just the clients. It is possible through some bookkeeping errors, that shareholder amounts or payroll amounts are listed in the summary. By reviewing the information ensuring that the only amounts that are listed belong to actual customers, Edmonton bookkeeping can ensure the accuracy of the information.
When entrepreneurs have the most accurate Accounts Receivable aging summary possible, that can give them the confidence they need to ensure that they are regularly sending out statements to their clients, and making regular collection calls. When they do this, they can ensure that they are being proactive in their business to ensure that they are encouraging customers to pay their outstanding invoices promptly. Edmonton bookkeeping says that business owners should establish a collection protocol in their business so that when they review their Accounts Receivable summary and see clients that owe money, they automatically have a plan in place on how often they are going to contact those customers in order to get them to make payments. The longer and invoices outstanding, the higher the risk it is for not getting paid, and the more often an entrepreneur should call that client in order to receive payment.
When business owners are comfortable with reviewing their Accounts Receivable aging summary regularly, they will be confident enough to use the summary to collect payments that they are owed from their clients. When they do this, they can ensure that they have money coming into their business regularly, and they can minimize cash flow problems in their business.
Edmonton bookkeeping | why entrepreneurs should understand AR summaries
if business owners are not understanding their Accounts Receivable aging summary, they will not be able to make collection calls as efficiently as they could say Edmonton bookkeeping. The reason for this is because the Accounts Receivable aging summary is a list of all the clients that owe entrepreneur money, but have not paid yet. It is organized by date of invoice and can be important for entrepreneurs to review so that they can easily tell who needs to get a statement and who needs a collection call.
Business owners should understand that by establishing a protocol early on in their business, can help entrepreneurs know how to respond when clients are overdue on an invoice. Edmonton bookkeeping says that great best practices would be if an entrepreneur sends out a statement to all customers who had an outstanding invoice once a month. They should make their collection calls coincide with payment disbursements such as running payroll. This is effective because an entrepreneur will have done a bank reconciliation in order to ensure that they have the money in their business to make that payment. If not, it is a great opportunity for business owners to make those calls to ensure that they have money coming into their business to make that payment.
When business owners have that protocol already established, they can ensure that they know how they are going to react when they review that Accounts Receivable aging summary. By being proactive, they can ensure that they are encouraging their clients to pay their bills.
A business owner should also have communicated their payment terms to the clients ahead of time. The reason for this is so that clients know exactly what to expect, and every time a business owner calls them, they can remind them of the payment terms. This can help support the case that the business owner has of getting them to pay the money that they owe. A business owner should also ensure that they are checking credits and references for the clients that they are willing to extend this credit to. by ensuring that they are extending credit to the most reputable clients, and ensuring that they are checking credits and references as well as establishing payment terms early, all of these things can significantly help an entrepreneur in their ability to collect on those invoices says Edmonton bookkeeping. By doing this consistently and regularly, can help entrepreneurs ensure that they are collecting their money in their business that they are owed. Since half of all entrepreneurs fail in business, and 29% of those businesses say that they ran out of money as a reason why their business failed, consistent and appropriate collection procedures can help entrepreneurs ensure that they are bringing the money and that they are owed into their business efficiently and effectively as possible says Edmonton bookkeeping. By doing this, can significantly increase an entrepreneurís chances of succeeding in business, and as long as they’re also ensuring that they are attracting new clients regularly, a business owner can ensure that they are growing.