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Management Accounting Best Practices

Accounting Management: Accounts Receivable

A company offers products and/or services to its customers to generate sales. The transaction takes place when the customer buys the goods and/or services at the price and conditions agreeable to both parties. Generally the transaction is completed when the customer pays after taking delivery of goods and/or services.

However in cases where there is a long-standing relationship between the company and a customer, the buyer may make payment at a future date. This also takes place when the two parties have a payment agreement.

The invoice as presented to the buyer and that transaction, which is recorded, is referred to as accounts receivable. When the customer pays his invoice, his account is credited with that amount. The accounts receivable ledger records the details of each customer's transactions and payments received.

Since more and more companies are entering into a transaction with the customers by offering credit, managing accounts receivable can pose serious financial problems for a company if not efficiently managed. For instance, a receivable that remains unpaid for a long time can turn into a bad debt. At the end of the financial year, the total sum of accounts receivable is calculated. Applying discretion, uncollected invoices from the past 365 days (or as deemed fit by the company) are excluded from accounts receivable and classified under bad debts. The total amount thus arrived at is treated as a current asset on the balance sheet of the company.

Finally, an accounts receivable department should have a goal structure for each team member.

Accounting Management: Accounts Receivable Management

Like all management practices-sales, customer relationship and others-accounts receivable management is an integral one. Forming and implementing proper marketing strategies are an important to a company's overall reputation. The actual sales and invoicing construct the ideal base for development and growth.

However, it's important to ensure that that AR management energizes the profitability factor of the company thereby fortifying production, research and development, distribution and proper financial position, leading to profit generation and growth.

An inefficient AR department could submerge the company's bottom-line or worse still it could stagnate the pace. Good accounts receivable management keeps money flowing-the ideal AR management policy is to make sure that it does. Invoices must be sent and payments collected on time. If difficulties occur that impede the money flow, management must step up and identify and rectify the problem.

The customer may not be happy with the products or services or simply delinquent. Once the reason is discovered, proper action should be immediately initiated. If at all possible problems should be solved internal, however, if external assistance is required, the source should always be appropriate and reputable Finally, the best accounts receivable management provides a smooth running organization.

It should be noted that concrete financial goals should be in place when managing an accounts receivable team. Each member of the team should have his or her own set of monetary targets - for daily, weekly, monthly, and sometimes even hourly goals. This ensures that everyone is on track, and gives people a tool with which to measure success.

Accounting Management: Accounts Receivable Job Description

In business it's vital to maintain a cordial relationship with the customer in order to grow and get ahead of the competition. While it takes a lot of care on the part of production division to create cutting edge products or services, it's up to the marketing division to create the market for those products or services. Finally, it is extremely important for proper follow-through to take place - even if that means chasing down people who owe the company money.

A mishap or misunderstanding in attempting to collect receivables can adversely affect a company's reputation. That said the accounts receivable team perform a valuable function make significant contributions to the company's survival and growth.

It does pay to understand and follow certain guidelines. Job responsibilities include keeping an up-to-date billing system since inaccuracies result in collection errors. Keeping a check on monthly receivables activity while making sure that that billing, collection, and reporting activities are carried out per specified dates. Looking into and researching customer account details, which include non-payments, delayed payments, and other irregularities. Creating an appropriate communication system that reminds the customer about payment without offending them. Last and most importantly, creating a recovery system while sourcing its strengths internally or identifying an external source for faster recovery at minimal expenses.

The communication can make use of telephone calls, post mail, email, and so on. The language should never sound bullying, but it should sound firm, and it should state all the facts. The person who owe money may even appreciate the service of being informed exactly how much they owe and for what. This helps them in their own personal accounting.

Accounting Management: Accounts Receivable Collection

Every company follows its own credit policy set by management. For some the credit period offered to the customer is a week while for other organizations it could be as long as a month. Problems start when payments are not forthcoming within the time agreed upon. This is when a company has to initiate the accounts receivable collection.

Quite simply, it is the act of gathering payments for past due invoices, which is necessary in keeping a business running smoothly. Since a company expects payments from its customers, similarly it has to make payments to other companies or individuals such as creditors (for goods and/or services) or everyday expenses including interest, rent, and salaries.

Accounts receivable collection is as necessary to a company's smooth operation as sales and marketing are for its survival and growth. By and large, the process of accounts receivable collection has to include the following. The collection process should initiate immediately as the credit term ends. If the credit terms include last interest fees the exact amount of interest should be collected. Suitable practices should be employed for collection, which includes communicating with the concerned person regularly until dues are settled. However, discretion should be applied in all communications so as not to diminish a company's image or its relationship with customer.

The actual process of communicating with the person who owes money includes, but might not be limited to, telephone contacts, emails, post mailings, and so on. The accounts receivable expert should always be cordial when talking with a customer.

Accounting Management Best Practices Training Course Subjects

Accounting Management Best Practices Training Course Subjects:

Costs, Expenses and Revenues. Profits and  Loss. Break-Even Analysis. Assets and Liabilities. The Balance Sheet. Stocks, Shares, Bonds Earnings and Dividends. Shareholder's Equity. Cash Flow. Debt Control and Debt Collection Period.  Taxation. Financial and Performance Ratio Analysis. Public Companies and analysis of annual reports. Decision Making Using Managerial Accounting, Audit and Internal Control, Earnings Per Share EPS, EBITDA, IAS International Accounting Standards, GAAP.

Accounting Classes:
Training Workshops: Management Accounting Course in Las Vegas, USA
Planning, controlling and auditing accounting reports

Management Accounting Course - Online Distance Learning
Planning, controlling and auditing accounting reports




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