Every business must manage their accounts payable and receivable as it is important to track what you owe your supplier and what your customer owes you. If your company is a large one that manages hundreds of transactions a day managing your accounts payable and accounts receivable is something you cannot ignore.
Here is how you can manage your accounts payable and accounts receivable
Most owners and managers do not like when the transactions take a long time to close. The receivables department mostly initiates the credit terms and this may vary based on the clients. A customer who has a good credit rating often gets a greater flexibility period to make payments. However, first-time customers are not given this liberty. Most companies have a 15 to 30 day time period when it comes to making the payments. The payables department should make sure the payments are released immediately after the shipped items arrive in a good condition. Doing this might help you take advantage of the discounts the suppliers offer for early payments.
Shortening the transaction cycles
Making the transaction cycle a shorter one for the items that are bought and sold will save your companies money on labor. The more longer the transaction cycle is less is the cash flow. Framing timelines for both accounts payable and receivables helps in shortening the transaction cycle. Framing a timeline and getting all the departments to issue their invoices, purchase orders and all other required documents on time on a designated day of a week or month will help you create a routine and organize your work.
It is difficult for companies to stay at the top of both the accounts payable and the accounts receivable departments. When the volume of the transactions becomes huge dealing with it becomes a more tedious task. When there is high demand receivables can signal payables to order for more items. When the items are less the payables will have to restrain their procurements until there is stability.
Keep an eye on your old accounts.
Recording each transaction and issuing the statements regularly is vital. However, keeping an eye on the old accounts is also important to make sure everything is settled down. Setting up a policy indicating the maximum period taken to clear a customer’s account is a good move. If the suppliers are missing out on the payments establish a timeline on when it has to be cleared.
Use software to track
Tracking the accounts payable and accounts receivable can be a painstaking process. Using software to automate makes the process easy and helps track anomalies if any.
Managing and keeping a track of the accounts payable and receivables help managers and owners make smart decisions that can have a positive impact on the future of the organization. Get your accounts payable and receivables right with Park Intelli. Quality Accounting & Quality Service is what we believe in.