What is Accounts Receivable?
Accounts receivable, in simple terms, is the amount of money a customer owes to a business for the goods or services that they have acquired, but haven’t paid for yet. The accounts receivable cycle process refers to the entire procedure, starting from extending a credit, to collecting payments for that.
Accounts Receivable
Credit-to-Cash Cycle should be understood thoroughly in order to attain effective management of the accounts receivable.
Accounts Receivable Process Flow Chart
Here’s an example of an accounts receivable process flow chart map that can help you understand the credit-to-cash cycle better!
Step By Step Accounts Receivable Process For Customers
Step 1: Initiation: A customer places an order to start the accounts receivable cycle.
Step 2: Sending of Invoices: An invoice consisting of the details of the trade is sent to the customer.
Step 3: Managing Collections: The cycle starts from the moment the invoice is sent. Customers usually are presented with a specific repayment period, which is followed by reminders
Step 4: Write-off Bad Debts: Unsuccessful payment collections are written off as bad-debts.
Step 5: Processing Payments: All the payments made by the customers need to be processed and updated in the accounts receivable software. And that’s how an accounts receivable end to end collection process in Houston works!
1. Billing Management
We help in managing your billing process for accounts receivable optimally. Our approach is highly effective; we understand how important it is to send invoices that are professional, accurate and are mailed in a timely manner. We also act as a customer service center and will respond to all phone calls, letters and emails.
2. Customer Acquisition
The major stride; here is to settle on the reward or the risk involved, when it comes to extending the terms of credit or while granting the right level. You can now determine the payment history of a customer, by simply purchasing a credit report.
3. Delinquency Management
When it comes to accounts receivable management; the most time-consuming part is managing the delinquent accounts (an account that is past due).
4. Recovery
Once the account is deemed uncollectible businesses pass the account to third party debt collection agencies in order to recover the amount. We have the collectors in-house to recover the debt.
Benefits of Accounts Receivable
- Helps Increase Sales
Offering credit options helps attract new customers, and therefore, assists in an overall increase in sales of the business.
- Helps Analyze A Business
Accounts receivable metrics stands as a crucial elements for stakeholders to analyze and assess a business’s liquidity, credit policy, and customer base as well!
- Helps Enhance Cash Flow
Managing the accounts receivable cycle effectively leads to a consistent and steady cash flow to the business, which is necessary for daily expenses and short-term obligations.
For more accounts receivable process improvement ideas, contact our experts at (713) 360-6645.