Hey, I'm Morgan Law
from fine point stop is
and my goal is to help bookkeepers
and business owners
better manage their finances.
I actually also have
a whole YouTube channel
dedicated to just that.
today and partnering with QuickBooks
to do a video series,
all about how to help business
owners better run their business.
A steady stream of cash inflows
is really important
to running your business,
and accounts receivable
is a big part of that.
Today we're going to talk about
just what our accounts receivable
and also some tips
on how to improve them.
Before we get any further,
don't forget to give
this video a thumbs up,
as well as subscribe to QuickBooks'
YouTube channel.
If you're more of a reader,
there's also going to be an article
linked in the description box.
Accounts receivable is the dollar amount
that your customers owe your business
after purchasing goods
or services on credit.
And in this case, credit
usually just means
that you send them
an invoice at a later date
instead of being paid immediately.
You've probably also heard
the term accounts payable.
So this just means the amount
that your business owes to third
party vendors like your suppliers.
So accounts payable is what you owe
and the accounts receivable is
what is owed to you
to recognize an expense before it's paid,
businesses increase the accounts
payable balance
and in the same way
you increase the accounts
receivable when the revenue is earned,
before you receive the payment.
It's also important to note
that accounts receivable
is an asset account,
not a revenue account.
You'll find accounts receivable
posted with other current assets.
It's best to closely
monitor accounts receivable and enforce
a strict collections process,
because if too many people owe you money,
you're not going to be able
to have enough cash to run your business.
Accounting software
should provide an aging report for you.
So this will organize
all of your receivables by invoice dates.
You can look at that report
and see which customers
still owe you money
and you can follow up with them
with reminders via phone or email.
If you need to improve
your accounts receivable,
here are some tips to reduce
outstanding payments
and help your cash flow on time.
Number one,
create a formal written collections
policy and enforce it.
Once you start enforcing
your collections policy,
hopefully your customers
will start paying on time.
And if they don't,
they may stop doing business with you,
which might not be the worst thing
if they weren't paying on time anyways.
So having these payment
terms is really going
to protect your business
as you use it for the basis
of your collection policy.
You might choose to charge a late
fee for any customer
whose payment is too far
past the invoice due date.
Or you could also do a discount
for early payments.
Make sure you put the payment terms
clearly on the invoice
and talk to your customers about them.
You can check out our guide
to payment terms right here.
Number two, automate
the invoicing process.
Using automation is really going
to help reduce the risk of errors.
And those recurring invoices
can be processed in a way less time.
Emailing invoices to
your clients is great,
as well as providing
online payment options
because they can pay them way quicker.
Best of all, invoice
automation makes the
buying process easier.
And it also improves
your company's customer experience.
QuickBooks Online
gives you notifications
when your customers view their invoices.
And it also automates
payment reminder emails,
QuickBooks payments
makes it really simple to accept payments
and let customers pay their bills online.
No matter where they are.
So did all of that make sense?
Let me know in the comments if so.
Staying on top of your accounts receivable
really helps with unexpected
cash flow problems.
And it gets money in your hands sooner.
If you need more tips on following up
with customers about
collecting receivables,
make sure you check out the video
we made about overdue payments.
It's going to be linked
in the description box below
as soon as it's live.
Don't forget to give
this video a thumbs up if you liked it,
and subscribe to QuickBooks'
YouTube channel down below.
Thanks so much and have a great day.