Here’s How Your Account Receivable Can Save Your Business

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.