Small businesses usually run on marginal profits at times and there is a need to keep a track of the credits offered and make prompt collections of the receivable amount from the debtors within due date to run a successful and profitable business.
As an SME business owner, you might be wondering who a debtor is and how selling on credit may impact your business.
Who is Debtor?
Debtors are the individuals or organisations who owe money to a business for a purchase made by them on credit.
What is Accounts Receivable?
Accounts receivable are the outstanding bills or invoices or the money that the customers or clients owe to the company when they purchase on credit.
Steps involved in managing Accounts Receivable
Steps involved in maintaining Accounts Receivable include
· Verification of Accounts
· Sending invoices
· Generating reports
· Posting the paid invoices
· Balancing
· Matching reports and following up and intimating the debtor about them through emails and messages.
The advantages of Accounts Receivable
Though risky offering, the advantages of Accounts Receivable are many
· Credits help the firm in staying competitive
· It builds customer loyalty and trust and helps growing sales
· High collection ratio shows high efficiency and is a measure of the liquidity of the company’s Account
The disadvantages of Accounts Receivable
When customers fail to pay for the purchases made on credit, your business may suffer a huge loss.
Differences between Accounts Payable and Accounts Receivable
Account Payable is a liability while Accounts Receivable is an Asset.
Using Accounting Software to record Accounts Receivable
Tally, ZOHO, QuickBooks, MS Excel and so on are the Accounting Software
Challenges in maintaining records
· The process of integrating data and maintaining Accounts
· Difficult to get a clear picture of Amount collected till date and the balance receivable.
· Effective communication suffers.
How Hylobiz can help you maintain your Account and integrate data?
Once you choose Hylobiz as your payment and invoice management partner, recording and data integration becomes easy for you through-
· Dashboard reporting that works on multiple ERPs
· Communication through email or SMS service
· Connected System- access restriction based on role.
Hylobiz is ready to help you with maintaining your Accounts Receivable.
So, feel free to contact us at-
· Email- support@hylo.biz
· Phone- 91 80 49518396
Read our blog originally published here :https://hylo.biz/accounts-receivable-everything-a-business-owner-needs-to-know/
