Many businesses issue invoices, which are requests for payment at some future time. If that’s you, then you have accounts receivable and the money you’re owed needs to be closely managed.
What is accounts receivable?
Accounts receivable involves invoicing customers and tracking payment of those invoices. It often requires you to follow up on overdue payments.
Why does it matter?
You’re not a charity. You need to get paid. Fail to manage accounts receivable correctly and your business will rapidly run out of money.
How to manage accounts receivable
Decide how long customers will have to pay your invoices and commit it to writing. Share and agree on those payment terms before doing business with anyone new. Create and send invoices as soon as a sale is agreed (include the agreed payment terms on the invoice). Watch your bank account for payment and follow up immediately if they miss the due date. You can get more tips on accounts receivable in our Invoicing Survival Guide.
Modern accounts receivable
Invoices can be created quickly on apps and sent with immediate payment options like credit and debit cards. Smart software can even check your bank for payments and keep a watchlist of unpaid invoices for you.
Figure 4, What’s involved in managing accounts receivable.
Chapter 6: How to manage accounts payable
Paying vendors isn’t exciting, but it sure is important. A good accounts payable process will keep you onside with your suppliers. Learn how.Read next chapter
5. How to manage accounts receivable