Businesses and self-employed people deal with customers and clients to whom they supply goods, products, or services. But their orders aren’t always paid for immediately after execution. Invoices are written, and the accounting department manages the outstanding money owed to your business, and that is where accounts receivables come in.
Accounts Receivable (AR) is the department within organizations responsible for ensuring that all incoming payments are received and processed on time and accurately. They generate revenue for businesses by ensuring that customers and clients are appropriately billed and work with other departments to secure payments.
From managing an organization’s incoming transactions, to forging strong customer relationships, the accounts receivable department staff has certain defined responsibilities. That includes entering and sending invoices, assigning payments, tracking due dates, demanding payments, and accounts analysis.
Accounts receivable is the money your clients and customers owe you. The main goal is to retrieve the payments for services or goods in a timely fashion. AR management’s primary goal is to minimize the days sales outstanding and processing costs alongside maintaining good customer relationships. AR department’s role is to help prevent overdue payment or non-payment and businesses from running out of working capital at any given time.
AR departments oversee receiving funds on behalf of the company and applying it towards the current pending balances. The department is further segmented into collections and cashiering teams. While the former seeks the debtor, the latter involves the monies received. AR impacts the company’s liquidity, and companies also use AR as collateral when obtaining a loan.
The AR department within organizations ensures that the company receives payments for the goods, services, or products and records all the transactions accordingly. In most businesses, AR is typically executed by generating an invoice and either mailing or e-delivering it to the customer and ensuring that the payment is received within an established timeframe.
The primary responsibility of the receivables department is to create demand for payment letters. Their utmost priority is to retrieve cash owed to your business by writing dunning notices to customers with payment arrears.
An account receivable specialist usually reports to an AR manager who supervises billing, credit policies, collections, and increasing AR turnover. The AR manager acts as a liaison with the legal department in case of disputes (if any) during the receivable collection process.
The duties of accounts receivable department staff include all the activities that help ensure their business receives payments for goods/services/products. An AR specialist manages incoming payments, maintains accurate bookkeeping records, communicates with clients to request payment, collects payments, creates reports and balance sheets documenting overall profits and losses, and updates client accounts based on payment terms.
An efficient and well-organized receivables department is critical for any business, and AR specialists play a crucial role in the company’s finances. Because of this, businesses looking to hire accounts receivable specialists look for a long list of expertise and traits such as skills in project management, organization, and effective communication to collect the payment from customers and clients. As they must work in accounting departments of organizations to provide administrative and bookkeeping support, they are expected to possess the relevant skills.
You must have, by now understood the importance of accounts receivable and how AR can be the lifeblood of your organization. Partnering with an experienced AR solutions provider can help optimize the process while you can shift your focus to high-value tasks.
For almost two decades now, QX Global Group has supported businesses across geographies and industries to streamline collections. By leveraging best practices, industry experience, and automation, we help optimize the entire receivables process, improve customer relationships, and decrease operational costs.
We hope you found this blog insightful. Partner with us today to get all the support you need to transform your receivables function.
Originally published May 23, 2022 05:05:56, updated May 23 2022
Topics: Accounts Receivable Process