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5 Simple Steps To Manage Your Accounts Receivable Management System

By 247 MBS 3 years ago

5 Simple Steps To Manage Your Accounts Receivable Management System

By 247 MBS 3 years ago
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5 Simple Steps To Manage Your Accounts Receivable Management System

By: 247 MBS posted on March 29th, 2017 in Medical Billing Companies

Accounts receivable

In business terms, accounts receivable is called as “AR”. In simple terms it can be referred as the outstanding invoices that the company has or the money that the company is owed from its clients.Generally business are running on the credit basis as to retain its customer.

Necessity of accounts receivable in a business

Most companies operate by allowing its client some portion of their sale to be on credit mostly to regular or special clients. Who are invoiced periodically and the dues are collected. This is where accounts receivable comes in.

Accounts receivable process

AR has got few processes like

  1. CREDIT DECISIONS – seller checks whether buyer has credit worthiness and decides to provide the customers a credit.
  2. BILLING – after the products are sold, billing is made and sent to the customers for payment. Customer is given a pretty decent duration for the payment to be made.
  3. RECEIPTING – AR officer checks for the payment in the bank. Receipts it into the AR System and generates invoices.
  4. COLLECTIONS – The collections officer identifies all the invoices that are unpaid and informs the customers the same and tries to collect the dues.
  5. DISPUTE MANAGEMENT- In case the customers have got any disputes in the payment, it has to be checked properly by the trained staff and try to resolve it as soon as possible.
  6. BAD DEBT– Wen the bill is in dispute and not resolved it would be then considered as bad debt.

 

 5 simple steps to an effective accounts receivable management

  1. Get it organized

A key to successful management is a good and effective organizing. It can be achieved by setting up a separate department and well trained team for handling it.

  1. Using credit limit.

Customers can be given or set a credit limit according to their credit worthiness. And can be increased based on their prompt payment

  1. Start early and clearly communicate.

When the payment is late, it has to be communicated early and necessary actions have to be taken and it has to be clearly communicated to its customers about the credit policy.

  1. Collection call and reminder

When all the intimations has been sent and still payment has not been done by its customers. It’s time to call them and remind the dues which they owe and remind them to pay the dues as soon as possible. The reminder must be gentle and yet powerful which make them pay.

  1. Setting up financial charges and rewards

The company has to set up financial charges for the late payment of the dues as well as some rewards if the payment has been made promptly.

ACCOUNTS RECEIVABLE IN SHORT

Accounts receivable is an important and crucial process for a company to take up, as it has to manage both its customers and its financial position equally. An uneven or improper accounts receivable management system may end up in losing its customers.

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  Medical Billing Companies