Being the lifeline of every business, Accounts Receivable holds a great influence over every function of the business. At the same time, no other branch of accounting offers as much potential as Accounts Receivable in improving operations and ROI with less effort.

An efficient and smooth Accounts Receivable drives operational efficiency, streamlines and smoothens operations, reduces your costs, enhances customer experience and even improves employee retention. Yet most businesses fall short of optimizing their Accounts Receivable and fail to achieve these benefits.

In this blog we are going to delve deep into the importance of effective AR management can bring about fundamental changes in business operations and accounting performance. And then help you understand how a remote accounting firm can help transform your Accounts Receivable management for good. Read on:

Importance of Effective Accounts Receivable Management:

Cash is key for any business. Affective Accounts Receivable management is all about optimizing every operation that leads to maximized cash flow, reduced risk of bad debts and improved customer relationships without any friction. Here is how basic tenets of effective Accounts Receivable management can accomplish for any business:

  1. Helps understand the customer better: An effective Accounts Receivable starts with evaluating the credit ratings of the customers which help you gauge their ability to repay the amount and set the guidelines to minimize the risk. For our clients at Back Office Accounting, we conduct an in-depth review of the customers according to their industry to come up with the right guidelines. This way the risk is nipped in the bud when it comes to AR.
  2. Greater visibility of AR process to fend off risks:More often than not, lack of visibility over the AR may push the businesses to invest in Accounts Receivable which inadvertently comes to bite the back. Effective AR management sheds light on the entire picture of the finances to help you make the right decision about investments. This visibility also lends you enough knowledge to effectively manage risks by monitoring and managing credit limits and other factors for better cash management.
  3. Optimizes the Sales:When a business knows the customers they are dealing with it gives them actionable knowledge to attract better customers by offering improved credit policies. At Back office Accountants, we analyse the credit capabilities across different industries of our clients to give additional insights that can our clients persuade new customers.
  4. Increase the cash in-flow & reduce your costs:All the optimizations in AR are performed with a singular goal of increased cash in-flow. Greater cash in-flow translates to increased cash in hand and improved opportunity for development and investment. In the same vein, the costs of the Accounts Receivable process can be slashed significantly while improving the overall operational efficiency. The right AR automation software can simultaneously reduce the time, and cut down errors, and administration costs associated with Accounts Receivable management. Since a business will have to tackle more challenges, this benefit becomes more apparent as a business grows into a large corporation.

Most businesses do not house enough AR expertise and experience to benefit from effective Accounts Receivable Management. If you are one such business you can seek help from remote accounting firms specializing in Outsourced Accounts Receivable Services. Here are 4 ways they can help:

  1. Credit risk analysis:With a goal to reduce the risk, an AR team can verify the background, and credit history and determine the credit limits for new customers. In addition to this, an AR team will also review the credit approval process and make necessary based on the industries and the specific risk profile.
  2. Seamless invoice management:Invoice generation is where most businesses struggle when the volume is high. While some fail to generate invoices is a timely fashion, others make invoices error-prone which creates more complications. Remote accounting firms are equipped with trained AR resources who leverage invoice automation, and electronic billing systems to seamlessly manage invoices day in and day out.
  3. Strengthen your collection process:Lax collection process of a business often hit the cash flow. A remote accounting firm can help strengthen the collection efforts by engaging in collection efforts which may even include training the staff. Accurate reporting and automating the process to ensure error-free reporting, negotiation of the payment plans, and discounts, and re-structuring them to enable quick collection – a remote accounting firm like Back Office Accountants can bolster the collection process of a business.
  4. Financial planning and Prediction:With complete information at hand, remote accounting firms can help a business evade potential cash flow risks. Experienced remote accounting firms specializing in Accounts Receivables can foresee the problems to help prevent them with the right AR procedures. If you are looking for a remote accounting firm that can help you achieve all the above benefits, you can contact us at Back office Accountants here: