Let’s talk a bit about accounts receivable, or A/R. We like this because A/R is an asset – it represents funds that have been earned or sales that have been made, for which you haven’t been paid yet. In other words, this is money owed to you.
We’ll talk about accounts payable (A/P) in a later video and post.
I personally like A/R, because this is where I got my start in accounting. Because of that early start, I learned some tricks and tips to help you take care of your receivables effectively.
Ideally, you want to make sure to work those active invoices regularly. The longer it takes to receive funds, the harder those funds become to collect, so it’s important to keep working those accounts. Small business owners tend to be right on the funds owed to them, so often don’t require our services to help collect their accounts. But, if you’re having difficulties receiving funds, or if you tend to put invoicing and collecting off, it may be well worth it to have an outside bookkeeping firm run that part of your accounting for you.
If you have someone who decides not to pay you, then those invoices need to be written to Bad Debt, and ideally turned over to an outside collection agency to continue the collection process.
We are excited to offer a free strategy session to qualified businesses. To find out if you qualify, please reach out to us at 801-692-0032. Our specialists are standing by to help you!