Finance & Accounting

What is Account Receivable Services and why to choose?

In today’s era, businesses are facing a challenging economy. Therefore, it has become quite essential for the companies to reinforce their resources and generate maximum ROI (Return On Investments) possible. Hence, it’s crucial to improve the company’s Account Receivable Services.

However, in-house accounts services could be expensive but outsourcing these services could prove cost-effective. Besides, it’s pretty daunting for most of the businesses to dedicate their ample time and resources required to handle the cost of carrying debt over time.

Hence, you are advised to delegate your accounts receivable services to the trusted professionals in the city. In this blog, we are going to discuss what actually account receivable mean, how it affects your business, and more.

What Does Account Receivable Mean?

Account receivable is the amount that a customer owes to the company for purchasing goods or services. It is generally the unpaid amount or used on credit.

Accounts receivables have a massive impact on the company’s cash flow activities. If not done correctly, it can weaken the company’s finance. On the other side, a strong accounts receivable could help companies to generate higher revenues. Hence, outsourcing these services to the one who has expertise in this particular field could be a wise option.

End-to-End Accounts Receivable Services provided by Enterslice

• Sales orders processing
• Payment follow-ups
• Invoicing and billing
• Bookkeeping
• Customer reconciliations
• Customer help desk
• Verification of Invoice receipt
• Credit Memo processing
• Invoice reconciliation with payments
• Credit Control Tools with Continuous Monitoring
• Dispute / Chargeback management
• Bad Debts/ Delinquency Management
• GST Form collection/CST C-forms
• Recovery suites handling
• Debtor Aging Report Preparation and Processing
• Monthly Open Balance Statements to Customers

Advantages of Outsourcing Accounts Receivable Services

Contracting accounts receivable services is the most efficient way to save money, time, and resources. Hence, if you find that the percentage of your accounts receivables is low and that your business receives inaccurate and late payments, then you should definitely delegate your AR works to an experienced professional.

Upgrade your Accounts Receivable Process

Outsourcing your accounts receivable, you can collect payments quickly and within the required time. Furthermore, to ensure that there’s no delay in the payment collection, the service provider uses customer-friendly options and advanced electronic billing.

Moreover, you don’t need to be present during the time of payment as all mobile payments and electronic transfers are handled properly. Besides, several payment options let your customers choose their preferred mode of payment and pay before the due date. In turn, this improves the cash flow of the company.

Reduce Time and Cost

When you operate such services in-house, it is both costly as well as time-consuming. You would require investing in building an accounts receivable department, hiring staff, buying equipment, and infrastructure.

However, when you outsource AR services, you are required to pay only for the service you have hired them. Hence, through outsourcing, you can save you ample time and cost.

Let you Concentrate on your Core Business Operations

By delegating your accounts services to the professional, you can focus on core business operations so that they can grow. The outsourcing accounts receivables service provider tracks down people who make delay payments, thereby providing you sufficient time to grow and build your company to its complete potentials.

Hence, outsource your accounts services to the trusted service provider in the market and engage yourself in more important work.

Increased Efficiency

The outsourced agency has a team of skilled professionals who are well-experienced and has in-depth knowledge of outsourced work. And this is what an in-house team generally lacks.

Because of these reasons, the outsourced company is able to provide higher efficiency by executing your accounts receivables with accuracy and with the due time.

Effective Customers’ Screening

One who holds expertise in accounts is better able to set clear credit policies and examine the credit worthiness of multiple clients. They consist of the skills to figure out from the several clients that who have a strong credit history and therefore, are able to pay you back before the deadline. Such know-how can help you in saving money for a long time.

Faster Collections

More delays you make in collecting the overdue amount, the lesser amount your company will recover. The more your accounts get overdue by a month or year; you will lose more money which will directly impact your cash flow.

However, a service provider automates your accounts receivable process and let you close your books and save on cost.

Steps involved in the Process of Account Receivable Services

The steps involved in account receivable services may vary for different size of firms. On one side, bigger firms have a larger cash flow and hence, they don’t hesitate to invest in highly skilled IT systems and credit management systems to reinforce and handle the process well.

However, on other hands, small firms have limited resources and therefore they can’t invest so much in hiring. Instead, they outsource and save their time and cost both.

Let’s find out the steps for the accounts receivable process. They are as follows:

• Step 1: Establish Credit Practices

Firstly, the company needs to create a credit application process. Then, depending on the applicant’s credit-worthiness, it shall conclude whether it will offer goods on credit or not. The company can also opt for offering credits to single customers or other businesses.

Furthermore, the company will build some terms and conditions for credit sales which must comply with Federal laws on credit. Moreover, the document must specify the requirements and obligations of the clients. For instance, the company must make its clients known about the interest rates for the credits.

• Step 2: Invoicing and Billing for Customers

An invoice is a document that a customer receives on the purchase of certain goods or services. The invoice consists of info such as the cost of products/services rendered, details of the same, and the expected payment date.

Every invoice has a unique invoice number so that one can easily retrieve it. Depending on the customers’ choice, they are provided with either a physical or electronic invoice. Generally, companies opt for electronic invoices since they are more convenient and cost-effective.

Hence, the next step is to send the invoices or bills to the customers immediately. Or the customer will delay while making payments.

• Step 3: Monitor Account Receivable

When you are done with invoicing, the next step includes tracking of accounts receivable by an Accounts Receivables Officer. The officer will monitor the payment deposited in the supplier’s bank account, put it into the AR system, and allocate it to an invoice.

The officer is also responsible for reconciling the AR ledger which ensures that payments are properly posted. Furthermore, it also issues monthly statements to its clients, which provides customers’ information about the amounts owed.

• Step 4: Accounting for Account Receivable

The Collection Officer finalizes the due date for payments of both bad and the unpaid debts. Once the officer has examined the unpaid debts, the accounts department will create journal entries to record the sales. Moreover, the accounts department is also liable for verifying discounts made on early discounts.

The Effect of Automation on the Account Receivable Process

The world has become technology savvy, and everything today has automated. Automation plays a vital role in changing the way the business world operates now when compared to earlier days.

It has made things quite simple, cost-effective, and time saving. However, the initial cost would be high, but once you have purchased the right software and technology, you will recover the amount as soon as possible.

Here are some of the impacts automation has on the accounts receivable process:

• Automation has simplified the process of accounts receivables in many ways such as sending the reminders to customers for due payment on a frequent basis;
• It has reduced the need of workforce for simpler things;
• Saves time and helps in enhanced productivity;
• Procurement or accounts receivable has been organized;
• Payments are more secure and quick now;
• Reporting and analysing of transactions has been properly structured.

Wrapping Up

Account receivable services are extremely crucial to aid businesses to operate efficiently and generate more profits. Hence, one should never compromise on such things in any condition as accounts services are quite significant for the company’s growth.

Although you can choose to do the accounts receivable in-house but it would be too costly and not so efficient. Therefore, we recommend you to outsource the service to a trusted service provider such as Enterslice.

Services provided by the Enterslice consists of an innovative approach to aid companies boost up their AR department’s performance by strengthening overall work capital and reducing DSO (Days Sales Outstanding). Contact us now.