Strategic A/R Consulting
Why should business owners care about their accounts receivables?
Business owners should care about accounts receivables because it represents the money that is owed to their business for goods or services that have been provided to customers. Accounts receivables are a critical part of a company’s cash flow and financial health. By monitoring and managing accounts receivables effectively, business owners can ensure that they are receiving payments on time and in full. This helps to maintain a healthy cash flow and allows for timely payments of their own bills and expenses. Additionally, by identifying and addressing any issues with accounts receivables, business owners can improve their customer relationships and prevent future financial problems. Overall, accounts receivables are a vital aspect of any business’s financial management and should be carefully monitored and managed.
Lower accounts receivables can increase your business cash flow in several ways:
Faster payment collection: When accounts receivables are lower, it means that you are collecting payments from your customers faster. This reduces the amount of time it takes for cash to come in, allowing you to have more money available to use in your business.
Reduced outstanding balances: A lower accounts receivables balance means that you have reduced outstanding balances on your books. This can reduce the amount of money tied up in unpaid invoices and increase your cash flow.
Improved cash flow forecasting: With lower accounts receivables, you can more accurately forecast your cash flow. This allows you to plan for upcoming expenses and investments and make informed financial decisions for your business.
Improved customer relationships: By managing your accounts receivables effectively, you can improve your customer relationships by ensuring that payments are received on time and in full. This can lead to increased customer loyalty and repeat business.
Overall, lower accounts receivables can increase your business cash flow by improving payment collection, reducing outstanding balances, improving cash flow forecasting, and strengthening customer relationships.
63% of business owners have had a late payment on their invoices in the past year, of those, 45% have experienced late payments on half of their invoices. Reducing DSO is important in order to have working capital so your business can grow.
Contact us today to schedule a consultation and and see how we can help improve your cash flow with accounts receivables management strategies.
