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Accounts Receivable Management – Defined

This a rewrite of a poorly written article I posted back in Jan 2014…

Am I being obtuse if I say accounts receivable management is the management of your accounts receivables?  I suppose so … so I’ll give you first the Wikipedia definition then mine.

Wikipedia defines Accounts Receivable

as a legally enforceable *claim for payment to a business by its customer/ clients for goods supplied and/or services rendered in execution of the customer’s order.

 Cash In defines Accounts Receivable

Accounts receivable is the money your customers owe you for the service or product you provided.  Accounts Receivable Management is the work you do to make sure you collect that money on time and in full.  And an Accounts Receivable Management System is what you need to make sure you get that work done on time and completely.

Accounts Receivable Management = Collection Prevention.  

Do the work correctly and on time and you’ll prevent most of your collection problems before they ever occur.

While most small business owners and managers get the “Cash is King” maxim and intellectually understand the need to collect their accounts receivable quickly and without aggravating their customers, we’ve found collections work tends to resemble the neglected step child of the back office environment and is frequently neglected in favor of more urgent or more agreeable tasks.
 
Or, put more simply, many employees and even owners will avoid doing collection work whenever there is anything else to do.  And there is always something else to do.
 
To continue the analogy, we believe Accounts Receivable Management needs to be released from the neglected step child dungeon and brought up to the princely throne to which it is entitled.

Sales and Accounts Receivable

Perhaps one of the best ways to accomplish that is to look at Accounts Receivable Management or really the final collection of your accounts receivable as a completion of the sales cycle.  With just a moments thought you’ll realize that’s not a stretch.  Sales we don’t get paid for aren’t sales and customers who don’t pay aren’t customers.  They both cost money instead of making money.  But I digress – the point is Accounts Receivable Management isn’t a separate thing – it’s the last and frankly the most desired step of the entire sales process.  Let’s try to give it the attention and respect it deserves.

If you are an accounts receivable specialist, more commonly known as collector, Kudos to you – you probably don’t get the respect you deserve but my hat is off to you:)

Want some help? Call me at 800-201-CA$H (2274) my extension is 110.

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