In today's competitive business environment, accounts receivable management is key to the financial health of a business. Effective management and acceleration of accounts receivable can not only improve your cash flow, but also reduce financial risk and ensure your continued operations. In today's discussion, we'll dive into the effective management of accounts receivable and how to do it.
1. Suggestions for accounts receivable management
Good accounts receivable management starts with strict controls within the business. In order to reduce the risk of bad debts, finding effective management paths is key. Enterprises shall set up a special credit management department, and for credit sales business, full-time personnel must conduct an in-depth investigation of the customer's credit status. Credit management requires comprehensive research, analysis and professional control by a professional team, which is essential for the sustainable development of an enterprise. For those SMEs or self-employed individuals with limited resources, consider outsourcing credit management to a third-party company, which can not only save costs, but also ensure timely payment after the contract is signed.
In the process of credit management, enterprises should record customer information in detail and establish a customer resource management system to accurately assess the credit risk of customers. The credit management department also needs to keep track of customer information and update customer status in a timely manner to make accurate risk assessments. With sufficient information, companies can effectively protect their rights and interests when customers delay payments.
For overdue accounts receivable, enterprises can appoint special personnel to strengthen their efforts, or negotiate with customers, and actively owe money without increasing costs. In addition, companies can also consider handing over overdue accounts to professional institutions**, which can reduce internal pressure and save costs.
Second, accounts receivable ** method
There are two main types of accounts receivableLitigation and non-litigation
Litigation MethodsIt involves attorney's fees, litigation costs, and a long court trial period. The non-litigation method does not require upfront costs, no fees if it is unsuccessful, and the commission is paid according to the agreement after the payment is received, which is more economical.
Non-litigationIt is usually resolved through business communication and covers a variety of areas such as finance, treasury, corporate credit and commercial law. Through business negotiation and credit pressure, we will reasonably and legally protect the rights and interests of customers. Third-party involvement in collection puts tremendous pressure on debtors and increases a sense of urgency, which is often difficult to achieve by direct customer collection.
3. When to consider accounts receivable collection
1. Accounts receivable for more than 90 days;
2. Accounts receivable that are difficult for the enterprise to promote;
3. If you want to collect money quickly without damaging the customer relationship;
4. Accounts receivable that have not been resolved for a long time due to disputes;
5. Accounts with litigation risks or evidentiary issues;
6. Accounts receivable that are difficult to enforce even if the lawsuit is won.
Fourth, the six principles of accounts receivable collection
1. The sales staff shall be responsible for the accounts of the products sold**.
2. Priority collection of accounts receivable with a short overdue time.
3. As much money as possible, don't overly pursue all the money at once.
4. Set a reward mechanism according to the difficulty of debt settlement to motivate debt settlement.
5. Consider litigation carefully, because winning a lawsuit may not necessarily lead to payment, and the lawsuit itself has costs.
6. Try third-party collection, formal collection agencies usually do not charge in advance, and do not charge if they are unsuccessful, which can effectively save enterprise costs.
As a result, companies can significantly improve the efficiency of their accounts by implementing a clear credit policy, strengthening the accountability of their sales teams, adopting timely collection strategies, and considering third-party collection services. In addition, regular credit assessments of customers can prevent potential risks and ensure the stability of the company's cash flow.