5 WAYS EFFICIENT ACCOUNTING HELPS YOUR BUSINESS

 

Business risk can arise from a variety of sources: economic shocks, natural disasters, political unrest, or in the case of 2020, a global pandemic. During such challenging times, businesses need to be inventive to adapt to changing circumstances and diligent about anticipating and managing these risks. The external factors that give rise to this type of business risk are often completely outside of business owners’ control. To manage risk during chaotic times, smart business owners will do well to exercise the right level of control where they can. One such area is the financial management of the business itself.

Under challenging economic conditions, cash is still king. Business owners need to support their cash flow and cash reserves to have the resources to withstand the many shocks that may befall a business, such as sudden loss of revenue or clientele, the imperative to pivot to a new line of business or means of delivering service or transitioning toward a more digital, online, or remote-friendly mode of operation.

Because businesses generate cash by collecting cash for selling goods and services, it stands to reason those business owners that fail consistently to collect cash promptly make it harder for them to operate with agility when hard times arrive. For many businesses that deliver goods and services and invoice their customers, they are poorly equipped to handle collections on those receivables. Most business owners are still using various homegrown, time-consuming, and labour-intensive methods to collect payment for unpaid invoices. Many businesses have started adopting accounts receivable collections software to manage cash flow and collect payments.

One business owner uses a series of colour-coded post-it notes attached to paper printouts to keep track of which accounts have unpaid balances. For customers that do not pay on time or that require a few reminders, she is spending considerable time every month writing reminder e-mails and making phone calls to customers requesting payment. Another uses a spreadsheet and a laborious process of shifting rows of data around to indicate when payment has been received. For this business owner’s long-time customers, he extends advantageous payment terms of Net-15, Net-30, even Net-45 in some cases. He spends hours every month updating the spreadsheet to determine which ones are overdue, by how many days and then reconciling bank balances with the spreadsheet.

In both of these cases, they would be better off automating their receivables collections process using various software applications available such as Troveworks free-to-use software. Let’s explore the ways such automation software can make your accounting system strong and efficient:

  1. They allow business managers to create a repeatable, consistent, series of personalized e-mail messages. The software then automatically sends the right e-mail at the right time to the customer to remind them they still have an unpaid balance and eliminating the need to manually track customer accounts, look up or remember the due dates, and the number of days overdue in order to determine what sort of e-mail to send. By loading your customer account and invoice data into the solution, it determines automatically which e-mails to send based on the number of days relative to the due dates for each invoice.
  2. They successfully track the delivery of these e-mails and even will allow the user to register automatically when payments have been received and applied to the open balances. The solution keeps a history of collections activity, provides the ability to manage and resolve billing disputes, and add notes to the account indicating any relevant context or status information.
  3. All the responses from your customers are managed so that the relevant communication to collections are tracked and stored in one place. That way, anyone on the team with responsibility for billing and collections can see what communication and action have taken place on the account and provide high-quality, consistent service, representing the business in a unified way to the customer.
  4. Having a technically upgraded accounting system in-house enables business owners or their back-office team members to spend their time doing things that have a greater impact on the business instead. By using a consistent and repeatable process that keeps track of all communication, they reduce or eliminate the risk of unpaid invoices falling through the cracks. Keeping detailed collection history in one place eliminates the possibility of forgetting key details that may either make the payment harder to collect or make the business seem disorganized in front of valuable customers.
  5. Apart from this, it can help to boost the effectiveness of business managers by providing visibility into key receivables metrics over time, such as Days Sales Outstanding, accounts receivables ageing, daily cash collections, and cash forecasting (to name a few). The dashboard provides both a snapshot view of the business while allowing the user to drill into the details to identify and understand where the trouble spots in the organization’s collections may be.
5 WAYS EFFICIENT ACCOUNTING HELPS YOUR BUSINESS 5 WAYS EFFICIENT ACCOUNTING HELPS YOUR BUSINESS Reviewed by Twinkle on 03:20:00 Rating: 5
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