The worst-case scenario for many businesses is having to chase up overdue payments from clients. Not only is it stressful and frustrating for employees, but it can mean cash stays tied up for longer, lengthening the cash conversion cycle.
Considering how many industries – from retail to construction – extend lines of credit to their customers, it’s essential for businesses to know how to collect their accounts recievable with as little time and hassle as possible.
There are a lot of things that contribute to a successful business, but there’s no doubt that cash is a pretty significant one. Whether or not a business can generate enough revenue to not only stay afloat, but make a profit, determines whether or not that business can continue to operate.
But collecting that cash is not as simple as swiping a customer’s credit card. From the first cent a business spends in buying its stock, to the final cent the business receives in payment from a customer, the cash conversion cycle can tell a lot about just how efficient and effective a business is.
Credit management and collection is the important part of business that can easily become problematic. The awkward phone calls chasing up late payments, the back-and-forth emails and reminders that disrupt your workflow, and – of course – the ageing invoices filling up your accounts receivable as you wait to get paid.
Countless credit management and collection apps have stepped up to automate and streamline the process. If you take a look at Xero’s app store you can see just how many are on the market. Yet for achieving ultimately the same purpose, these apps each have their own features and pricing that will influence which one works best for different businesses.
This Xero Accounting and PayPal training workbook is our free gift to you. It’s designed for all tradespeople — and anyone else — who does the bulk of their work (and their pricing) ‘out and about’.
It’s designed to help people who just want to get the financial aspect of their work sorted out — so they can get back to doing what they do best. In the case of these tradies, it was doing a great job on the tools.
However, few small businesses suffer from poor cash flow because they’re unaware of how to manage their debtors properly.
Rather they suffer poor cash flow because they lack the resources to chase late payers or, as in most cases, they don’t have the time to stay on top of their accounts receivables to ensure their clients don’t become late payers in the first place.
Aussie company, ezyCollect, aims to solve this problem for medium sized companies – here’s how.
This post has been created to demonstrate simple accounting principles for our MYOB Training Course students. It demonstrates, visually, a very simple fact that is often sensationalised.
I’ve been to many presentations, seminars and watched hundreds of webinars run by people who describe themselves as gurus yet the secrets they reveal are actually just plain old good accounting principles.