When a company sold goods or services, it has the right to receive certain amounts of cash known as accounts receivable (AR). It is simply a fund owed by a consumer to the company for the rendered services.
When funds are not yet collected, it will always be a company’s asset on the balance sheet unless the AR is created and a sale is transacted. The revenue gets in the point then. Company’s revenue is the top line of the business. It is all about the money that takes in from many fund sources.
When account receivable is handled the best way, you can make your business stand out. How? This article might surprise you!
Account Receivable Real Functions
The purpose of AR is not just to record all those to-be collected funds, but also to attract new customers. It can even help in creating repeat business.
While buyers are able to pay for everything they planned buying, others cannot. Some purchasers don’t maintain enough cash to cover all their needs at once. By giving them a chance to buy items they like that can be paid later on can greatly help your business attract more customers. It can also encourage existing ones to stay and purchase more.
In such a process, AR works by sending invoices to customers who haven’t paid yet. You can set a specific due date such as 1 month or 60 days and offer a small discount if they pay on or before it (ex. 10%). If they can’t make it, you can give additional fees.
Sometimes, collecting your money sucks up, considering account receivable financing will save you.
Advantages of Account Receivable Financing
Companies that allow a certain fraction of their sales to be on a credit status are important to help customers avoid the hassle of making an actual payment process. You can receive many pros in return.
Take advantage of your AR sales by ensuring your clients are getting referenced account information without trouble. Highly organized accounts can also offer your business a significant sale advantage which can build loyalty among buyers and establish goodwill.
Immediate Cash Flow
By getting all your receivables and invoices handled by a commercial financing company, you don’t need to wait months to receive your money. You are able to get it immediately if you are badly in need.
AR financing does not need your company’s equity. This means you still have the full ownership of everything. Though venture backers take a substantial stake in return for their investment, the agreement you make with them can save your business growth in the future.
To obtain a loan in the bank is not easy. You need to undergo so many processes. Account receivable funding does not give you that. It does not require collateral anymore. You don’t also have to wait months to verify your creditworthy.
Since you don’t have to focus on the collection anymore, it is your business that your main focus now. This can help you generate new income instead of spending a lot of energy getting your customers to pay their bills.
The Best Way to Track your Money
Keep your businesses moving forward by tracking your customers. The one and only way to track your money the best way is to use accounts receivable software.
SooPOS gives you the power to know who owes you money. It even provides details about how much the amount is taken, when will the due date and many other important information you need to keep your business going.
When it comes to AR things, it is always better to keep Shopify POS in mind so you can track all the money owed to you.
Remember, money is life. Without it, your business can’t survive.