5 Simple Ways to Manage Accounts Payable & Receivable

The veteran business owners know very well that it is imperative to track what you owe a supplier, and how much you have to receive from your customers. Whether you are running a small business or leading a big enterprise, you should balance the accounts receivable and account payables.

The accounts payables can be described as what you owe to your suppliers. On the other hand, accounts receivable indicates that what you have to receive from the customers. It will help you to maintain the cash flow and help your business to accentuate.

It is quite juggling to manage account receivables and accounts payable. If you want to stay at the top of your business and beat your competitors, then you should precisely track your purchases or outstanding payments that you have to receive from your customers. Here, in this article, we are going to discuss some tips and tricks that will help you to be successful and achieve your goals. 

1. Make Accounts Receivable Process Automatic

You should track your accounts receivable process and payable process. There are various types of automatic accounts receivable software that help you in simplifying the accounts receivable process. This software can generate the invoices and send it to your customers. These invoices will act as a reminder. The automatic accounts receivable software will send reminders on the right time so that your business can receive on-time payments.

This software will reduce the burden on your staff members and help your business to grow. The latest technology accounting software will help in maintaining the optimum cash flow and let the business grow in the highly competitive market.

2. Reduce Transaction Cycles

Time is precious for all business owners. Therefore, it is recommended to reduce the transaction time for buying and selling objects. If you can maintain a small transaction cycle, then you can save money. Mostly, the longer transaction cycles can create hurdles in the cash flow. If any company opts to get paid before making payment to the suppliers, then it will delay the transaction process. If you want to get rid of this situation, then it is imperative to set certain timelines for accounts receivables and payables. You should hire an efficient accounting staff that can issue invoices and sends them to your customers.

3. Improve the Communication Process

You should improve the communication process so that you can efficiently manage your account receivable and account payables. All business owners struggle hard to stay at the top of the competition. But, when they start dealing with a large volume of transactions, then they gradually start losing.  The best way to make the transaction process simpler and easier is all departments in the company should properly communicate with each other.

All departments should interchange the information on purchases and sales. If the demand of customers gradually starts increasing, the account receivables can inform the account payables department. During the bad time of the business, the payable can curb the procurement process until the stability is obtained.

4. Keep an Eye On Aging Accounts

It is imperative to record all types of transactions so that you can easily issue statements. It is imperative to keep an eye on old accounts to ensure that everything is as per the rules and regulations. You should also keep an eye on the old accounts so that everything is settled. If you observe outstanding accounts receivables, then you should immediately take the necessary actions. You should warn that customer to make immediate payment.

Even after warming the customer fails to make the payment, then you can suspend your business with that customer. You should set rules and regulations for a maximum period of time that should be given to the customer to make payments. Similar rules should be created for account payables. You should make payments to the suppliers within a certain period of time frame.  It will help in building good relationship with suppliers.

5. Create Credit Policies

There is one thing that business owners and managers do not like about transactions i.e., taking too much time to close the transaction. The account receivable department should create specific credit terms and policies. These terms are policies are varied according to the clientele they are serving. The regular customers often get high flexibility in the time period of making payment.

On the other hand, first-time customers may not be able to get much relaxation in making payments. Most companies provide a 15 to 30 days window to make payment. According to the policies, the account payables department should make payment immediately after received the raw material in good condition. If you make early payments, then some suppliers also offer discounts.