From an accounting perspective, Working Capital is defined as the excess of a business’ short-term assets in relation to its short-term liabilities. The make or break factor for many businesses to function and thrive is the availability of this working capital. In other words, having money and assets that can be easily converted / be available as liquid cash. Unfortunately history has shown that even very profitable firms have faced difficulties or been forced to close due to lack of working capital.
As a small business owner one of the more effective steps you can take is to develop a process to manage the collection of your account receivables. At Accounting 360 Solutions our advisors, accounting administrators and bookkeepers have experience working with account receivables and implement strategies to improve the time it takes to collect. Here are a few of the steps and strategies we have provided to our clients:
Ensure Your Account Payable (AP) policy is in keeping with your Account Receivables (AR) terms – Some outstanding businesses run by accomplished entrepreneurs have had to suffer through severe cash crunches solely because their AP days (the days before they must pay their bills) were shorter than their AR days (the days it takes to receive payment). An Accounting 360 Solutions advisor can help fine tune your AP and AR policies to ensure that account receivable days are in line with your business needs.
Analyze Client Profiles to Improve Invoicing – Our team, can help you fine tune your invoicing process through the analysis of your records and clients’ business type. For example, you may be able to reduce the time to payment by sending the invoices to meet the internal client approval process of the client rather than invoicing all customers at the same time of the month. With automation in your accounting process, this is very easily done and without any additional costs vs traditional month end close.
Improve Documentation Process – It’s time-consuming for most businesses’ internal staff members to proactively keep track and collate all the supporting documents that are required to validate an invoice. When one of our advisors assists you in your invoicing & accounting processes, you will have the added peace of mind of knowing that all the documents you require to prepare your invoices are available to improve your billing process and ultimately help with the receipt of funds your business is owed.
Why not contact us to arrange a no-obligation consultation to review your account receivable procedures and policies or to learn more about how you can streamline this process for your business. We’ve successfully helped numerous companies reduce the administrative burden and cost of managing their accounting and finance responsibilities. We can be reached at: 1.613.793.5222.
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