Part-time CFO services | What Is And Accounts Receivable Aging Summary

In Accounts Receivable summary is a list of all of the customers that an entrepreneur has that over the money. They are organized in order of date, in columns based on the date on the invoices. The far left column is going to have a list of all of the customers that have invoices that are not yet overdue. These customers are called current, because they are not over do. The next five columns represents a variety of invoices that are longer and longer outstanding from one thirty days, 30 to 60 days, 60 to 90 days and ninety days past due.

Part-time CFO services says that business owners need to be extremely mindful of all invoices that are over ninety days past due. The reason is, because these are the invoices that are least likely to get paid. The reason why business owners may not get paid, is because most contracts are set at four thirty, forty-five and some sixty days, so any clients that are outstanding invoices for longer than that, have broken the contract. Business owners need to question why they broke the contract. As the client unhappy with the work? If an entrepreneur was aware of this earlier, they may have been able to fix the problem. Is the client experiencing financial problems? They may be able to enter into a payment plan, rather than simply not getting paid at all. An entrepreneurs next course of action would be to litigate, which may be more expensive than they can manage. They should be very aware of all of the invoices that are outstanding that length of time.

One way that business owners can make plans to collect money on invoices that are outstanding that long, is by calling and emailing that client every single day. Part-time CFO services recommends that the old adage, the squeaky wheel gets the grease, the entrepreneur become the squeaky wheel so to speak. Many entrepreneurs hesitate doing this, arguing that they do not want to upset the clients, but they should ask themselves if they are worried about upsetting a client is refusing to pay an invoice to them.

When business owners learn how to read their AR summary, and use the information to contact with clients that are most at risk for not paying, he can ensure that they are collecting money as best as they can, so that they can remain cash flow positive in their business. Since half of all entrepreneurs fail within Canada in the first five years, and 29% of those entrepreneurs say that running out of cash was the reason why, understanding how to collect money efficiently and effectively can help minimize that risk for entrepreneurs.

Part-time CFO services | What Is And Accounts Receivable Aging Summary

One of the most important things that an entrepreneur can do in their business according to part-time CFO services, is learn how to efficiently collect money from customers that owe them. The reason for this, is because running out of money is the second most common reason why entrepreneurs fail in Canada, so avoiding running out of money is extremely important. One of the ways that business owners can help this, is by learning the best practices for collection calls, so that they can ensure that they are contacting clients as often as necessary, so that they are bringing in money on a regular basis.

Many entrepreneurs believe that contacting clients that all the money once a month is an efficient and effective Accounts Receivable strategy. However, part-time CFO services would argue that that is not often enough. While once a month is the bare minimum, the best practices that entrepreneurs should into the habit of doing, is making collection calls any time they are getting ready to disburse payments. The reason for this, is because entrepreneurs will be running a bank reconciliation, in order to verify that they have the money in their business to disperse those payments, whether it is paying vendors, paying their staff, or purchasing assets. They can look at their bank reconciliation, and see how much money they will need in the next couple of weeks to operate. This lends itself well for an entrepreneur to engage in collection calls once they see how much money that they need. If an entrepreneur does a bank reconciliation, and see that they do not have enough money in their bank account to make those payments or run that payroll, then they will be able to use the collection call as a way of generating the money in their business to be able to make that payment.

In order to help an entrepreneur ensure that the information in their Accounts Receivable aging summary is as accurate and up-to-date as possible, part-time CFO services recommends that rather than waiting for their bookkeeper to update their information, business owners can ensure it is kept updated in real time. While it may be too overwhelming for a business owner to try and update all financial information into QuickBooks, by learning how to update just their Accounts Receivable information, can help ensure that they are staying current. How they would do this, is every time they generate an invoice, they can upload that invoice directly into QuickBooks. Whenever an entrepreneur receives payment in their business, then they can go into QuickBooks and update that information as often as they receive it. That way, an entrepreneur can always be assured that their Accounts Receivable aging summary is always up-to-date, so whenever they need to utilize that information, they can be certain of its accuracy.