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Learning how to manage cash receivables

One thing that is important to any company is their cash receivables, which is also their invoices. Without these cash receivables or invoices the company would not be getting paid the money that they were owed. So learning how to manage cash receivables is important for every business owner.

Here are some steps that you should follow to manage your cash receivables.

Step one:
One way to stay on top of your invoices is to set aside one day each week to write out and mail your invoices. You can use Excel, accounting software or you can create your own invoices to send out. Remember when creating an invoice you want to make sure it includes some key components. You will want to make sure that your invoice has an invoice date, an invoice number, an address of where to send the payment, a payment due date, a list of goods or services provided with their prices (include sales tax and shipping amounts if applicable), and you want to include a total amount due. All of these items should be clearly marked for your customer to read. When you are sending out copies of an invoice be sure to include a copy for your records.

Step two:
After you have sent out the invoice you need to devise a way to keep track of the invoice to be sure that it is paid. If you have accounting software you will be able to track the payments of invoices by entering in your cash receipts. Even if you have an accounting software program it is still good business practice to keep track of the invoices that have been paid or that are still outstanding with a paper trail. To do this you will need to keep a record by hand or in Excel of your cash receipts, include the invoice number, check number and date of payment. After recording this information you should stamp the invoice as paid. This should be done on a daily basis when you are preparing your bank deposits.

Step three:
Another system to help you stay on top of your invoices is to use file folders. When you first create the invoices they should be put into on folder. You should also have a folder set aside for paid invoices and outstanding invoices. Once the invoice has been paid you should move it from the new invoice folder or outstanding folder to the paid invoices folder. If the invoice is past due it should be moved into the outstanding invoice folder, this folder can be broken down into how many days past due an invoice is so when you go to collect your outstanding invoices you will know where to start first.

Step four:
Another way to help stay on top of your invoices is by running an aged accounts receivable report. This will give you a break down of all invoices that are currently due, thirty days past due, sixty days past due, and one hundred twenty days past due.

Step five:
Regardless of which method you use to track your invoices you should set aside at least one day a month to call your customers who are past due on their invoices. You should start calling the customers who are over one hundred twenty days past due and work from there. When you call the customers do not be rude simply let them know that there payment is past due and you were wondering when they would be able to make a payment.

Step six:
In order to get your money you might have to work out payment arrangements with your customers, but do not offer them anymore credit until they have caught up with their past due bill. This will help to ensure that your company is not going to lose money from bad debts and that you will be able to pay your bills when they come due.

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