Part-time CFO Services | Why Reviewing Ar Summaries Is Important

One of the biggest reasons why entrepreneurs do not send out statements, or make collection calls is because they either do not understand what has on their AR summary, or they are not sure that the information is accurate. By learning how to read the statement, and understanding the information on it, can help entrepreneurs use those statements effectively to collect their money. The AR summary is going to show an entrepreneur a list of all of the customers who owe them money, and how much. Is going to be organized by the date of when they started owing the business owner. The far left column is going to show the most recent invoice customers, and each column to the rights will show increasingly longer outstanding invoices.

Part-time CFO services recommends that business owners are very aware of the ninety days plus past-due column, because these are the invoices that are most in danger of not being paid. The reason why, is because if they have not paid for over three months, there likely not planning on paying. Business owners should be very aggressive in what they do to collect this money from those clients. It is not unreasonable for business owner to contact by phone or email these clients every single day until they reach a resolution.

In order to ensure the accuracy of the information, and that it is as current as possible, business owners can learn how to update the information in their accounting software themselves, so that they do not have to wait for their part-time CFO services to do it every month or every other week. By learning simply how to upload any invoice that they create into their accounting software like QuickBooks, as well as entering in payments, can be significant in helping a business owner have the most up-to-date Accounts Receivable aging summary possible. This can help them send out statements more often, and contact clients that all the money.

By learning how to read their Accounts Receivable aging summary, as well as ensure the information is up to date, business owners can use that information regularly in their business to collect the money that their clients owe them. When there able to establish a regular routine with clients, they can ensure that they are going to continue to bring money into their business on a regular basis that can help them pay their own bills efficiently.

Part-time CFO Services | Why Reviewing Ar Summaries Is Important

It is extremely important that business owners get into the habit early on in their entrepreneurship of making collect calls and sending out statements to their clients says part-time CFO services. The reason is, because this way business owners can ensure they have flow of money coming into their business to help them pay their own bills and employees. Since half of all entrepreneurs fail in business, and 29% of those entrepreneurs say that the reason why they failed is because they ran out of money, having a good collection process in place early on can help a business owner avoid that problem.

Reviewing Accounts Receivable aging summaries regularly can help a business owner fix mistakes that may show up on the statements. By being very familiar with reading the summary, can make it easy for an entrepreneur to see any anomalies or errors. For example, a business owner should be very confident that all of the amounts that are listed on their Accounts Receivable summary are actual invoices that they are owed, and are expecting to be paid on. They need to be asking themselves is this a real amount that I am going to be collecting in my business? Part-time CFO services says that if the answer is no, they need to make a correction.

An example of an amount that might show up on their Accounts Receivable summary that does not relate to an amount that they are going to get paid by customer is if they see something listed as shareholder in their Accounts Receivable summary. Anything with that name should actually be in a shareholders loan account, and not clutter up the Accounts Receivable summary. This is going to help ensure the accuracy of their other financial statements, and help them ensure that all of the amounts outstanding on this AR summary is collectible money.

Another way that reviewing the AR summary can be beneficial, is when a business owner sees a negative number on the report. This is usually an indication of a deposit or an overpayment. Since that is more likely to be uncommon, part-time CFO services says that business owners can easily verify if that is the case. If not, the business owner should investigate as to why that showed up on the statement. A possible reason is that the business owner entered in a payment but did not apply at to the invoice properly. By catching mistakes, can help ensure the accuracy of their Accounts Receivable aging summary.

When business owners can help verify the accuracy of the information on their Accounts Receivable aging summary, they can have the confidence in sending it out on a regular basis to their customers, so that they can be very proactive in collecting the money that they are old in their business. By getting into this habit early on in their business, they can ensure that they are instilling good payment habits in their clients, and to help them have the money that they need regularly to run their business.