Part-time CFO services | How To Minimize Errors On Accounts Receivable Summary

One way that entrepreneurs can review their Accounts Receivable aging summary in order to minimize errors that may be on them, is by looking to see if there are any negative numbers on their accounts receivable aging summary. The reason why this should cause an entrepreneur to stop and investigate, is because typically, a client will be invoiced for work that is done, and that will be represented on their Accounts Receivable summary as a positive number. When they pay, it will show up on the summary as a negative number, and then the two numbers cancel each other out and it disappears from the summary. Therefore, part-time CFO services says that when an entrepreneur sees a negative number, that typically means someone has either prepaid or overpaid. Which is not impossible, it is just unusual, which is why a business owner should review it. If they can easily answer that there was a deposit made, then they can ensure the accuracy of their summary.

Many entrepreneurs may wonder what it means if they see both the positive and negative amount for customer. Part-time CFO services says that this typically will be represented on a balance sheet in two different statement periods. It may appear in the Accounts Receivable summary in one date range as a positive number, and then the same number will appear in a more recent date range, as he exact number, but negative. All this means is a business owner has logged in the payment, but have not applied that payment to the invoice. All that indicates to a business owner, is that they need to go into their accounting software and apply the payment to the correct invoice.

When business owners are learning how to use their Accounts Receivable summary to collect money from their clients, they are often unsure as how often they should be calling their customers. Part-time CFO services recommends that while monthly is an absolute minimum, business owners should actually get into the habit of doing collection calls with clients as often as they are doing any other accounting processes. Such as bank reconciliations before they run payroll. This means that a business owner can expect to do collection calls about twice a month as a best practices.

When business owners know not only how to read their Accounts Receivable aging summary, how to fix errors, and best practices for collection calls, they can ensure that they are using summary efficiently to be able to collect the money that they are owed, and increase the cash flow in their business.

Part-time CFO services | How To Minimize Errors On Accounts Receivable Summary

One way that entrepreneurs can ensure that they are staying cash flow positive in their business says part-time CFO services, is by using their Accounts Receivable aging summary. However, if the business owner is not confident in the summaries accuracy, they may hesitate to use it. As a result, there Accounts Receivable starts getting farther and farther behind, which causes an entrepreneur cash flow issues that could threaten their business. In order to help entrepreneurs have confidence in their Accounts Receivable summary, business owners can learn how to update it effectively, and fix errors.

A great way is to learn how to update their summary in real time. While it may be overwhelming or time-consuming for entrepreneurs to learn to update their accounting software with every single financial transaction in their business, keeping at least their Accounts Receivable updated is not only easy to learn how to do, but is also important. For business owners to ensure that there Accounts Receivable aging summary is as accurate as possible, Part-time CFO services says that every time a business owner generates a new invoice, they can easily and quickly upload that invoice directly into their accounting software like QuickBooks. That way business owners can be confident that the amounts owing are accurate. Then, an entrepreneur can ensure that every time they receive payments, they enter that payment into the software just as quickly. This does not have to be very time consuming, but learning how to do this, can help an entrepreneur ensure that there Accounts Receivable summary is always up-to-date, without needing to depend on their bookkeeper or accountant to do it for them. That can help them be confident that their summary is accurate so that they can do collection calls.

One thing that business owners should be looking for on their Accounts Receivable summary to ensure the accuracy of the information, is that they do not see anything called a shareholder or related party amount in the summary. Not only did business owners have a shareholders loan account that they can put amounts into, therefore rendering it unnecessary to be in their AR report, but any related party amounts that might show up in their Accounts Receivable report should cause an entrepreneur to create their own account, so that they do not have to be in their Accounts Receivable summary.

Entrepreneurs should understand that every single amount in their Accounts Receivable summary needs to be actual amounts that they expect to collect from their clients into their business. When they are confident that is what their AR report means, then they can be confident they can use that information to collect money from their clients.

Part-time CFO services says that it can be easy to teach an entrepreneur how to ensure that there Accounts Receivable aging summary is accurate, so that they can ensure that they are collecting money from their clients, so that they can stay cash flow positive.