Most of the businesses are confused about the
difference between the receipt of cash or selling on account. Many experts from
the best SEO company in nashik say that when you sell a product or
service and generate revenue then that economic good is collected through two ways,
either the receipt of cash or through selling on account.
Now, here the selling on account means that when
you sell on account, you are creating accounts receivable which means you are
earning revenue, but it is not collected in the form of cash. These two
strategies are different but many companies fail to understand that. Most of
the business owners get that difference between cash and accounts receivable,
but there are subtle differences in their management.
So to make the differences clear and manage your
receivable and cash flow properly you can go through these ways:
1.Do not become a banker:
When you start dealing with your customers and give
them credits then you are indirectly in the banking sector. But you should
question yourself that are you really becoming a banker? Many business owners
give credits to their customers without any consideration and think that this
would help them to increase their sales. So, companies should take care of this
first.
2.Get someone who could read your bank statement
along with you:
This is a simple practice of keeping an eye on the
finances of your business. Generally, this is the work of your CFO or the chief
accountant but you should make sure that everything should be done on time. You
should have a regular check on cash flow from operations and they should not be
missed, after all it is about your company’s revenue. There should not be any
mistakes in this as this is the crucial factor to set your business.
3.Account payable days should be shorter than
account receivable days:
When you are selling on credit, make
sure that the time it takes to get paid is always comparatively less than the
time it takes to pay. If you are confused between the terms then ask for
assistance from some intellectual people.
You also know that you want to collect money at a
faster rate than paying. Many renowned finance experts have recommended to have
a balance between these two aspects because if this balance is unbalanced then
it might lead to anxiety and worries.
4. Challenge your accountants:
Many businesses make this mistake of not
challenging their accountants and keeping them just for some easy work. Always
remember that they are not there only for bookkeeping, you need to give them
work and test their capability. Take help from them and work on financial
plans.
As it is about accounts, it is highly recommended by the experts of the best SEO company in Secunderabad that you should never tackle these problems alone. Take advice from your CFO or accountant and sort it out together because just a slight mistake in your accounts can crash your business forever.
0 comments:
Post a Comment