Frequently Asked Questions

Monitoring Accounts Receivables: An Interwoven Process

Q. Why is it so important to monitor your company's accounts receivable?
A. Turning receivables into cash is crucial to a company. A company must have cash to meet its needs to grow and not risk difficulties with its own suppliers.

Q. How can small businesses become ultimately more profitable if they lose customers by upholding their credit policies?
A. The large amount of time and energy spent on collection efforts expended for; marginally paying customers detracts from the owners ability to focus on his business and enhance profits from top customers.

Q. Should a small business enclose a postage paid envelope in the invoice sent to its customers?
A. An enclosed envelope is customer friendly and prompts faster return payment.

Q. Why should the small business owner ask himself whether or not slow payments or non payments possibly reflect issues with his company's product or service quality?
A. Product and service quality directly affects the collection process.

Q. Why should a small business owner post all customer payments to customer accounts as promptly as possible?
A. Prompt posting can tell the owner the average time a customer is taking to pay and thereby if the time is acceptable or not. The average payment time can also be used to project cash inflows for the owner's business in the following months.

Q. Should a small business perform its own collections or should this time intensive effort be outsourced?
A. Small business owners can gain more client contact by directly servicing their client and save on expensive outsourcing fees in the process.

Q. Why is it important for successful accounts receivable management to be an interwoven process?
A. There must be a written, consistently applied credit policy while at the same time a focused effort on the part of the small business owner to be customer service oriented, to maintain his bookkeeping, and to be conscious of quality control.

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