The coronavirus pandemic brought the world to a standstill, especially business. The global economy saw a drifting downfall due to multiple reasons.
Now that the economy is gradually recovering, the businesses are slowly getting back onto their feet. This is a great sign for companies patiently waiting for a positive change.
The recession phase that the pandemic bought with itself isn’t as easy to demolish. Major business routes like supply chains suffered a huge downfall denting the cash flows of many small-scale businesses forcing them to shut down or deal with bankruptcy.
Best Practices to optimise accounts receivable
In order to maximise the cash flow in corporate accounting for small business, a stronger and more efficient method should be implemented. Rising accounts receivable isn’t a great issue, but it requires effortless strategies to bounce back from the ungrateful pandemic.
But, how can you improvise accounts receivable and maximise cash flow statements?
The answer is elaborated below:
Maintaining proper client and billing data:
Before onboarding, proper checking of the billing data is an essential step. This step contributes toward problems like delays in future payments reducing risks for all further AR problems. This step ensures a strong base for all future accounts receivable auditing work.
Performing an accounts receivable audit is a must.
Another important step towards setting up a good Accounts receivable base is to gauge the current positioning. The step includes:
- Evaluation and analysation
- Taking a note of payment and collection periods
- Concern over owed amounts regularly
- An accounts receivable strategy concerning the goals
AR portfolio evaluation
After conducting an audit, evaluation of the accounts and a classification relying on the pandemic’s impact on the potential behaviour is the way to go. At first, we need to categorise the accounts into weak, strong and good. One can also organise the report into good, fair and poor categories.
Consider discounts and renegotiations on payment terms.
Discounts have been known to pave the way for early payments. Businesses can think of coming up with a pact of early-bird deals under fair categories with other companies. Offering a revised payment plan to businesses undergoing financial strains might increase the credit risk.
There are four best ways to optimize your company’s accounts receivable to gain the maximum benefit out of it.
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