When entrepreneurs get into the habit of doing their Accounts Receivable aging summary often, they will be able to use that report as a tool to significantly help them in their business says Edmonton bookkeeping. It is extremely important that business owners are able to avoid the same problems that have caused other entrepreneurs to fail, and the second most common reason why businesses in Canada have failed is that they ran out of money. By reviewing their Accounts Receivable aging summary often can help entrepreneurs avoid that fate.
Since the Accounts Receivable aging summary is a list of all of the customers that owe entrepreneur money, this is very important that a business owner pays attention to on a regular basis. This report is going to be organized in order of the date on the invoices, with the most current invoices on the far left, and the oldest invoices on the far right.
The reason why it is important that an entrepreneur is aware of all of the clients that all the money and review it regularly, is so that they can use that information to contact their clients in order to get those clients to pay the business says Edmonton bookkeeping. A business owner should establish early on in the relationship that a client with the payment terms are so that the client is very clear that the expectation is. It is also very important that an entrepreneur has a well-defined protocol on how to make collection calls to clients so that they are already prepared for what they are going to do when they review their Accounts Receivable aging summary says Edmonton bookkeeping.
A great collection protocol for business owners to adopt is to be sending out a statement to every single one of their clients, showing how much they owe every single month. Business owners should call every customer that has any outstanding invoices every two weeks, as that coincides with their payment disbursements like running payroll. The reason for this is when an entrepreneur does their bank reconciliation in order to verify if they have the money in their business to make that payment, if they do not have the money, calling their clients to pay invoices can help bring in the money they need to pay their staff. And if they do have the money in their bank to make that payment, Edmonton bookkeeping says that business owners should still make that collection call, because it can help an entrepreneur bring money into the business, so that they are not left with no money after they make that payment.
By being proactive in their business and learning how to review their Accounts Receivable aging summary, and use that information to collect money from their clients, business owners can be very proactive in ensuring they always have a positive cash flow in their business, so that they can pay bills, pay their staff, as well as use the money to grow their business.
Edmonton Bookkeeping | Best Practices For Reviewing Accounts Receivable Summary
It is extremely important that business owners learn early on in their business, how to review and understand their Accounts Receivable aging summary says Edmonton bookkeeping. The reason why this is important is that it can help entrepreneurs ensure that they have money in their business as they needed, whether it is to make payments, purchase assets, or grow their business. By ensuring that they are aware of this information, and making regular collection calls, business owners can minimize the length of time it takes their clients to pay them and be more likely to collect on all of the outstanding invoices.
There Accounts Receivable aging summary is going to show an entrepreneur all of the customers that owe the money, how much they are owed, and how long it has been since that client would the money. By engaging in collection calls on the most outstanding invoices, entrepreneurs can ensure that they are being very proactive in their business in collecting the money that they are owed. Edmonton bookkeeping says that the longer and invoices left outstanding, the harder it is to collect. A business owner may wonder why the client has broken the terms of the invoices. The sooner an entrepreneur is able to find out why, the sooner they can address it and fix it, or get paid.
Entrepreneurs should also ensure that if they are updating their own Accounts Receivable summary by learning how to use QuickBooks, they can end up with the most accurate Accounts Receivable aging summary possible. Edmonton bookkeeping says that business owners can do that, by asking their Edmonton bookkeeping company to teach them how to enter payments into QuickBooks, as well as upload invoices into QuickBooks as well. By doing that, entrepreneurs can ensure that they have the most current and up-to-date Accounts Receivable aging summary possible, that they can use to collect money from.
It is very important that entrepreneurs treat the money in their Accounts Receivable as cash because that is essentially what it is according to their balance sheet. It is listed in their business assets near the top, underneath cash. Not only will it negatively impact the business finances to not get this money, but it will also negatively impact the entrepreneur to not have the money that they need in their business to use it to pay their bills and grow.
When a business owner is able to be proactive in contacting their clients to pay outstanding invoices, they will be more likely to actually collect that money, and when they do, they can be confident that they will continue to have money flowing into their business on a regular basis, which is very helpful to ensuring that a business owner will have the money at their disposal any time they are ready to use that money, whether it is paying bills, paying their staff says Edmonton bookkeeping, or using the money to be proactive and grow their business.