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There are several things that business owners can review on their Accounts Receivable aging summary that can help them minimize errors. When entrepreneurs are reviewing their AR summary, they should verify that there is nothing listed in that report listed shareholder. The reason for that, is because a business owner will have a shareholders loan account where all shareholders amounts should be. By ensuring that all of the extra information is not in this report can help verify the accuracy of the information. Other amounts that might show up on their AR report an error could be payroll liability or payroll expense and even CRA overpayment. All of these instances should have an account elsewhere in the financial statements of the business, and when an entrepreneur can ensure that those are taken out of their Accounts Receivable summary, they can be certain that their report is as accurate as possible.
Part-time CFO services says that business owners should be certain that all of the amounts that exist in their Accounts Receivable summary represent actual customers that owe the business actual amounts. This way, when an entrepreneur uses the report to make collection calls, they can be confident that all of the entries on this list are accurate and can be called or emailed.
Other things that business owners should be looking for on their Accounts Receivable summary, are any round numbers such as five hundred dollars, or five thousand dollars. The reason is, full and complete numbers are rarely invoice totals. While it is possible, it is not that common, and is often the result of an entrepreneur accidentally invoicing an estimate instead of the actual invoice. Anytime a business owner sees a full number on their Accounts Receivable summary, they should look into the reason why.
By taking the time to review their Accounts Receivable aging summary on a regular basis, business owners can be confident that the report is accurate. This can help them engage in the Accounts Receivable activities that they need in order to ensure that clients that all the money are paying those invoices on a regular basis. Part-time CFO services says that the longer and invoice remains outstanding, the harder it is to collect, so it is important that an entrepreneur does this often, and on a regular basis so that they never are in danger of having a customer that is not going to pay them.
It is extremely important that business owners are confident that there Accounts Receivable aging reports are as error-free as possible says part-time CFO services. The reason this is so important, is because when entrepreneurs lacked confidence in those summaries, and makes it difficult for them to collect and send out statements to facilitate collections in their business. When this happens, business owners can stall the cash flow in their business, which puts their business in jeopardy of running out of money.
A very simple way for entrepreneurs to start reviewing their Accounts Receivable aging summary to minimize errors, is to simply look for a negative number. While negative numbers are not impossible to exist on report, it typically means that someone has prepaid and invoice like a deposit, or overpaid and invoice. When part-time CFO services see this, they review all of the payments that they got from their clients, to verify that they did receive a deposit or an overpayment. If after investigating, a business owner finds that this is not the case, then they can be certain that it is an error that needs to be fixed.
Another way that a negative air can appear on an Accounts Receivable aging summary, is when it is also accompanied by a positive number for the same client and in the same amount. It is usually in that different time. On the summary, but this typically is an error it typically means that the invoice has been created, and the payment has been received as well as entered into QuickBooks, but it has not been applied to the invoice. Part-time CFO services say that whenever business owners see this, all they need to do is go into QuickBooks and apply that payment to the correct invoice.
Once an entrepreneur has accurate Accounts Receivable aging summaries, all they need to know next, is how often they need to be reaching out to customers to make collection calls. Often, business owners think that sending out statements once a month is all they need to do, but the best practices actually for entrepreneurs to reach out to their clients every time they do and accounting process such as a bank reconciliation. By having their collection calls coincide with dispersing payments, can help entrepreneurs keep the cycle of bringing money into their business as they make arrangements for it to be paid out. By calling their clients, in addition sending those statements monthly can help an entrepreneur ensure that their business is staying cash flow positive.
Once a business owner is confident that there Accounts Receivable aging summary is accurate, and they know how often they need to be reaching out to their clients to make payments, part-time CFO services says that business owners can ensure their doing all of the right things when it comes to Accounts Receivable. The more proactive a business owner is, more likely they are going to be able to collect payments timely, and avoid having cash flow problems in their business.
