How It Works, And Why It Saves Money, Time
Author: Chris Coggins
Proper management of accounts receivable is essential for maintaining good cash flow. If you don't receive timely payments from your customers, you may struggle to pay your own bills on time.
Although it's up to your customers to process your invoices and submit payments, they are only half of the equation. Your own accounts receivable practices play a major role in efficiency and the bottom line.
How do you currently manage accounts receivable? For many companies, the process looks something like this:
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Supply a product or provide a service to a customer.
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Create an invoice based on the purchase amount.
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Send the invoice to the customer.
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Internally track the date the invoice was sent and the due date.
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Analyze aging reports.
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Send payment reminders and implement a collection process, if necessary.
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Receive payment via a check in the mail and update your accounting system.
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Deposit the check at the bank.
Although each of these steps may be fairly basic, it is the combination of activities that can become costly and inefficient, especially when you account for the amount of staff time required. Whether you have part-time staff dedicated to the task or assign the function to your administrative staff (or do it yourself), using cloud-based solutions for these types of back office functions can save you both time and money.
Using a virtual accounting solution, you can do all of these steps within one user interface. All of the steps can be completed online, and information is updated in real time. So if you were using such a system to manage accounts receivable, the process might look more like this:
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Log in to your virtual accounting solution.
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Send an invoice with the click of a button.
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Receive customized reminders regarding outstanding payments.
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Click to send payment reminders.
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Receive payments electronically. The customer's record is automatically updated.
At The Tax Office, we offer Back Office Support System (BOSS), which can help you streamline your accounting operations, including accounts receivable, accounts payable, payroll, tax filing and reporting. Contact us today to learn more about how BOSS can help you save time and money by outsourcing and greatly simplifying your bookkeeping chores.
