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E-Myth – “Why most small businesses don’t work & what to do about it”

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Part-time CFO services | Fixing Errors On An Accounts Receivable Aging Summary

Helping business owners establish a regular routine in sending out statements and making collection calls can help business owners maintain a positive cash flow in their business says part-time CFO services. An important part of this routine, is reviewing the statements regularly to verify the accuracy and fix errors. When entrepreneurs are confident that the information in their AR summary is accurate, they send out those statements and make those collection calls more often, which can significantly help them collect the money.

Business owners should be aware of what negative numbers on their Accounts Receivable summary mean, so that they can either confirm that it is correct, or fix any mistakes. A negative number usually means that client has paid a deposit on a job, or has overpaid a previous invoice. This is very important to review, because while this is not impossible to happen, it is more unusual, and a good way for a business owner to ensure the accuracy of their information. Since prepaying or overpaying is less common, a business owner is going to be able to easily verify if that was the case. Part-time CFO services says that if a business owner has not received an overpayment or deposits, one possible reason for that negative number could be that a business owner did not apply that payment to an invoice. If they have entered that amount into their accounting software, but did not apply it to any invoice, it will show up as a negative number as well.

Something else that business owners should be sceptical of when they see it on their AR summary, is a round number. Round numbers like five hundred dollars or two thousand dollars should cause a business owner to review the information. Again, it is not impossible, but invoices especially with taxes added, usually do not end up to around number. Part-time CFO services says that this can happen if an entrepreneur has accidentally invoiced an estimate instead. Any time a business owner sees a number like that, that should cause them to investigate.

Other ways that business owners can verify the accuracy of the information on their Accounts Receivable aging summary, is by verifying that all of the amounts that are listed relate to a customer, and an amount that they are owed. Business owners should go down the list of customers to verify that nothing additional has made not the statement by accident such as shareholder, payroll or CRA amounts. All of these amounts belong elsewhere in the financial statements, so business owners can ensure that those amounts do not convoluted their AR summary, but that they also get added to the correct places in the financial statements so they can ensure the accuracy of the rest of their financial information as well says part-time CFO services.

By knowing the things that they can easily review on their AR summary to either fix mistakes, or verify the information, business owners can ensure that they have the most correct and up-to-date Accounts Receivable aging summary as possible. This can help them be confident when they are sending out there statements and making collection calls so that they are bringing in money on a regular basis to their business.

Part-time CFO services | fixing errors on an Accounts Receivable aging summary

It is extremely important that business owners are confident in their Accounts Receivable aging summary says part-time CFO services. The reason is because a business owner will be more likely to make regular collection calls when they are confident in the accuracy of the information in the report. Not only should business owners be reviewing their statements on a regular basis, but they should also be aware of how to ensure the accuracy of the information, so that they will make regular collection calls and keep a cash flow in their business positive.

One of the reasons why a business owner might not send out there statements as often as they should, is because there part-time CFO services is only updating their accounting software once a month. A business owner should be contacting clients for payment more often than not, so if they can learn how to update their own Accounts Receivable aging summary, they can ensure that they have the most current information, and can send the information out as often as they need.

In order for business owner to do this, they just need to learn two things in their accounting software. Every time they make an invoice, they need to learn how to upload that invoice directly into their software. In they need to learn how to enter in payments whenever they receive payment to their business. When a business owner can get into the habit of updating their accounting software with invoices and payments, they can ensure that the always have an up-to-date Accounts Receivable aging summary, any time they want to send out statements, and call clients to pay outstanding invoices.

A business owner should always be very aware of how old the invoices are better on the AR summary says part-time CFO services. The reason for this, is because the longer an invoice is left outstanding, the harder is for business owner to collect. The column on the far right of the summary will show a list of all of the invoices that are over ninety days past due. They should cause a business owner to be very concerned, and do what they can to collect that money. Business owners should feel free to contact those clients by phone or by email every single day. Part-time CFO services says that some business owners are worried about upsetting clients, but business owners should shift their thinking, and not worry so much about upsetting a client that is not actually paying their bills. By being diligent in contacting clients that are either very late in paying, business owners can be certain that their doing everything they can to collect money from those clients.

By being confident in the accuracy of their Accounts Receivable aging summary, business owners can make collection calls regularly in their business, to get their clients to pay their outstanding invoices. It is important that business owners are doing this, so that they can use that money to pay their own bills and their staff.