• support@bizmanualz.com
  • Home
  • Contact Us
  • About Us
  • Help
  • My Account
Policies and Procedures SOP Manual Template WordPolicies and Procedures SOP Manual Template WordPolicies and Procedures SOP Manual Template WordPolicies and Procedures SOP Manual Template Word
  • Policy
    Procedure
    Manuals
    • CEO 9-Manual Set-45% Off
    • CFO 5-Manual Set-34% Off
    • Policy Procedure Software
    • Accounting Manual
    • Finance Manual
    • IT Policy Manual
    • HR Policy Manual
    • Sales Marketing Manual
    • ISO 9001 Quality Procedures Manual
    • AS9100 D Quality Procedures Manual
    • ISO 22000 Food Safety HACCP Manual
    • Production Operations
    • Medical Office Procedures
    • Nonprofit Procedures
    • Construction Procedures
  • Best
    SOP
    Software
  • Free
    Procedure
    Samples
  • How To
    Business
    Articles
    • Save Time Writing Procedures
    • Write Better Policies
    • Writing Procedure Manuals
    • Write Better Procedures
    • Strengthen Your Financials
      • Set Better Objectives
      • Tighten Accounting Controls
      • Improve Company Governance
      • Simplify Compliance
      • Reduce Business Risk
    • Improve Quality
      • Obtain ISO Certification
      • Make a Process Map
      • Implement ISO Quality
      • Improve Quality
      • Improve Management Systems
      • Increase Customer Satisfaction
      • Make Your Business Lean
      • Making Change Easier
    • Solve Business Problems
      • Organize Your Business
      • Business Startup
      • Be a Better Boss
      • Empower Employees
      • Grow Your Business
      • Find Business Improvements
      • Increase Innovation
    • Improve Business Processes
      • Better Sales and Marketing
      • Better Project Management
      • Improve Business Communication
      • Improve Internet Marketing
      • Improve Your Hiring Process
      • Improve Your Social Media
      • Improve Your Training
      • Improve Employee Health and Safety
      • Better Disaster Security Planning
    • Leverage Technology
      • Automate Policy Management
      • Improve Your Social Media
      • Increase Productivity
      • Analyzing Business Data
  • Lean ISO
    Consulting
    Training
    • Improve Your Training
    • Customer Testimonials
    • ISO 9001:2015 Classes | Internal Auditor Training St Louis MO
    • ISO 9001:2015 Classes | Lead Auditor Training St Louis MO
    • ISO 9000 Help | Lean Consulting Training St Louis MO
    • ISO Writer | Writing Policies and Procedures Training Class
    • Lean Training Class St Louis MO
    • FREE Quality
      Audit* Offer
0

$ 0.00

✕

How to Write Accounts Receivable Procedures

Categories
  • Strengthen Your Financials
  • Tighten Accounting Controls
Tags
  • accounts receivable
  • cash cycle
  • cash flow
  • credit
  • methods
  • metrics
  • procedures
  • process
Cash Flow Burn

Cash is everything to a business and you certainly would not want to burn up your cash. Learning How to Write Accounts Receivable Procedures helps you to control your cash flow; Let’s look at an example of accounts receivable procedures that is a part of the revenue cycle process.

Accounts Receivable Process Procedure

Let’s continue that crucial theme of time with another major source on your balance sheet; specifically, accounts receivable, or “A/R”. If you have $500,000 or more in accounts receivable, then by compressing the accounts receivable cycle you will generate cash. It is all about time.

Reducing Average Days Collectionaccounts receivable procedures

Why? Because if we focus on reducing your average days collection by 50%, your accounts receivable balance will fall to $250,000. The result? An extra $250,000 in your bank account!

  • On Sale
    CFO Responsibilities Financial Accounting Procedures

    5-Manual CFO Internal Control Procedures Bundle| Save 34%

    Rated 4.58 out of 5
    $ 1,695.00 $ 1,497.00
  • On Sale
    Accounting Policy Procedure Manual MS-Word Template

    Accounting Policies and Procedures Manual

    Rated 4.47 out of 5
    $ 495.00 $ 397.00
  • On Sale
    Finance Policy Procedure Manual

    Finance Policies Procedures Manual | ABR42M

    Rated 4.20 out of 5
    $ 495.00 $ 347.00

Let’s see how this would work in a real-life business scenario.

Service Business A/R Metrics

A service organization with $700,000 in average A/R balances needed assistance, so we examined their A/R function to understand and quantify the workflow and workload issues. Next, we designed and implemented a process to improve A/R performance.

The metrics we developed reduced their “over 60” accounts receivable by 85% and their overall A/R balance by 50% within 90 days of implementing the new procedures. With these new accounts receivable processes and reports, the company now tracks Average Days Collection and past due rather than just Days Sales Outstanding (DSO) as the measure of their collection effectiveness.

The result: an extra $350,000 in cash! Again, it’s obvious what a crucial role time plays and how an increase in velocity and discipline directly lead to increases in efficiency and cash savings. So, how can you use time to your advantage?

Accounts Receivable Procedures and Collection MethodsCOLLECTION TIME

Accounts Receivable is a part of the revenue process. The sale is not complete until you get paid for the sale and until you get paid you have loaned your money to your customers, interest free. The longer they have your money, the less chance there is for you to get your money back.

The money sitting in receivables is money that is not sitting in your bank account. Therefor, here are a few things to keep in mind when Writing Accounts Receivable Procedures.

Decrease Your Collection Cycle Time

Examine customer accounts that go beyond your terms. Do not wait until their late by as much as twice the net terms to take action. Time is your enemy, the likelihood of collecting your receivables decreases with time.

You have to catch collection problems early in the collection cycle. If you decrease your collection cycle time you will improve proper cash flow control.

Tighten Your Credit Policy

Examine credit process for slippage. Do you have a credit approval process? Do you perform credit checks? What standards are used to extend credit and how often do you review your credit policies to make sure they work as intended? These are a few of the Accounts Receivable question you should be asking.

Reduce Your Credit Terms

Change the credit terms you offer your customers. If you offer terms of net 45, reduce it to net 30. You might offer a discount of 1% if paid within 10 days else net due in 30 days. This is equivalent to 18 % annual interest and most businesses will take those terms.

Shorten Your Invoice Processcash flow time

Bill your customers immediately. This is a big one. Many service organizations wait until the end of the month to tally billable hours and determine customer charges, but waiting until the end of the month costs you money.

This could reduce your day’s receivable by as much as 15 days right there. Email or fax your invoices right away to save another day or two (e.g. QuickBooks accounting software contains this feature).

Reduce Your Billing Errors

Most customers delay payments because of invoice errors. Customers won’t recognize the invoice until it is corrected and may not even notify you, the vendor, of the error until you call for collection. Again, avoiding this delay in error and time will amount to cash savings.

Train Your Accounts Receivable Personnel

Make sure that all personnel involved are training to understand the performance metrics for their jobs. For example, a company will manage $500,000 in monthly A/R balances (that’s $6,000,000 per year!) using an A/R clerk who makes $40,000. But then the supervisor uses nothing more than On-The-Job (OJT) training for the clerk.

Does your CFO think that he or she (the CFO) is really managing the cash? But, in reality, that’s not the case; the clerk is managing the money day-to-day. So shouldn’t the A/R clerk receive enough training to manage such a significant amount of $6,000,000 per year? After all, it only takes a 7% change in A/R in one month to equal the A/R clerk’s entire annual salary. Isn’t the A/R savings worth a little extra time in training?

Maximize Your Accounting ProcessCash Flow

With the A/R department you should use each element of the accounts receivable procedures to gain the most benefit for your business. Automation improves business cash flow, and with time-saving accounting process procedures set in place, you will let your efficiency work for you

Write Accounts Receivable Procedures

With accounts receivable procedures in place, you will increase your efficiency by reducing your Average Days Collection. And of course a reduction in Average Days Collection means your A/R balance will also fall, creating more cash on hand. And already we’re halfway to our $1,000,000 goal!

Share

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Products

  • AS9100 D Quality Procedures Manual AS9100 Quality Procedures Manual Rev D | ABR217M Aerospace Quality Procedures Manual $ 395.00 $ 297.00
  • Accounting Policy Procedure Manual MS-Word Template Accounting Policies and Procedures Manual
    Rated 4.47 out of 5
    $ 495.00 $ 397.00
  • it standard operating procedures IT Policies and Procedures Manual
    Rated 4.50 out of 5
    $ 495.00 $ 397.00
  • Human Resources HR Policy Procedure Manual HR Policies and Procedures Template | ABR41M
    Rated 3.89 out of 5
    $ 495.00 $ 347.00
  • Sales Marketing Policy Procedure Manual Sales Marketing Policies and Procedures Manual | ABR44M
    Rated 4.00 out of 5
    $ 495.00 $ 347.00
  • Finance Policy Procedure Manual Finance Policies Procedures Manual | ABR42M
    Rated 4.20 out of 5
    $ 495.00 $ 347.00
  • Security Policy Procedure Manual Security Policies and Procedures Manual $ 395.00 $ 297.00
  • Disaster Recovery Policy Procedure Manual Disaster Recovery Planning Manual
    Rated 4.00 out of 5
    $ 395.00 $ 297.00
  • ISO 9001 Procedures ISO 9001 2015 Procedures | ABR211M
    Rated 4.60 out of 5
    $ 495.00 $ 347.00
  • ISO 22000 Food Safety Procedures Manual ISO 22000 Food Safety Procedures Manual | ABR213M
    Rated 3.83 out of 5
    $ 395.00 $ 197.00
 Free Sample Policies Procedures

accounting automation brand identity business business process change communication compliance Covid customer cybersecurity data data analytics digital marketing Ecommerce email employee hiring ISO 9001 lean management marketing metrics online policies policy procedures process productivity project management quality remote work risk security SEO social media software startup strategy team technology tools training website writing

Get to Know Us

About Bizmanualz

Our Customers

Our Contributors

Featured Products

Business Manual Products

OnPolicy Procedure Software

FREE Policies and Procedures

Privacy Policy

FAQs

Risk Free Guarantee

Process Improvement

Contact Us

Top Business Blog Posts

What is a Procedure?

What are Policies and Procedures SOPs?

What is the Purpose of a Procedure Manual?

What is the Difference Between Policies and Procedures?

How to Create a Standard Operating Procedure

What are the Top 10 Core Business Processes?

Are Procedures the Same as Work Instructions?

What Business Policies Does Every Company Need?

How to Start Writing Policies and Procedures

Business Procedures

Accounting Manuals Template

Finance Procedures

HR Procedures

IT Policies and Procedures Templates

Sales Marketing Procedures

Quality Assurance Policy Statement and Procedures

Medical Office Procedures

Employee Handbook Manual

Aerospace Procedures

Food Safety Procedures

Security & Disaster Plans

Production Procedures

Procedure Writing Guide

Featured Manuals

  • Alt Text CEO Bundle and Document Management Software Package $ 2,495.00 $ 1,857.21 one time, and
    $ 990.00 / year
  • St. Louis ISO auditor training class ISO 9001:2015 Classes | Lead Auditor Training St Louis MO $ 2,395.00 – $ 3,270.00
  • Standard Operating Procedures (SOP) 9-Manual CEO Company Policies and Procedures Bundle | Save 45%
    Rated 4.29 out of 5
    $ 2,495.00 $ 1,997.00
  • CFO Responsibilities Financial Accounting Procedures 5-Manual CFO Internal Control Procedures Bundle| Save 34%
    Rated 4.58 out of 5
    $ 1,695.00 $ 1,497.00
  • AS9100 D Quality Procedures Manual AS9100 Quality Procedures Manual | ABR217M Aerospace Quality Procedures Manual $ 595.00 $ 499.00
Copyright ©1999-2023 Bizmanualz, Inc. All Rights Reserved | Sitemap | Privacy Policy
0

$ 0.00

  • Home
  • Contact Us
  • About Us
  • Help
  • My Account
✕

Login

Lost your password?

Create an account?

Go to mobile version