Accounts Receivable PBO signifies the amount of money that the customer owes to the company. These can be considered as the online credits that a customer spent and will later be obliged to return. It is one of the crucial domains to enhance customer satisfaction. The whole process of accounts receivable can be explained into following steps;Read More
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Process of Accounts Receivable PBO
- The first step is to set credit practices that are taken under the AR process of the customer. Providing too much extension to the credit can create issues later at the time of repayment. That’s why the company needs to make sure that there is a maximum credit score limit. Implementing a credit rating system will also help in looking into the credit score of the customer before providing them with the borrowing opportunity. Anyone with a bad credit score will not be eligible for this offering.
- Next comes invoicing. This step requires a lot of communication. This surrounds your relationship with your customers. An invoice is a statement declaring the foxed numbers to your customers. Invoices summarise the products and their selling units to the customer.
- After that, the process of tracking the accounts receivable comes. For repayment, this step is very crucial. This step involves all the payment or due payment receipts to ensure the timely processing of the credits. Unpaid payments receive accounts receivable ledger under this step. Various software like QuickBooks is used for tracking the accounts receivable. Such software generates a report which notifies about due invoices and the amount of payment. There are also other options to track your accounts receivable like specific tracking templates. You can create such spreadsheets in Microsoft Excel.
- The last step is accounting. Accounts receivables make an important part of the financial statement. This makes it crucial that you add them correctly in the financial statements. For this purpose, you will need to make sure that your accounts receivables and invoices have been tallied and added to the statements. You can do accounting either by cash-basis or by accrual-basis.
40% of small businesses notified that their enhancing their customer services played a great part in enhancing their revenue. Accounts receivable is one of those steps which enhance customer satisfaction. For faster recovery of your accounts receivable, you can take various steps like applying late charges, rewards for early payment, forming credit policies, etc. Managing accounts receivable is crucial for maintaining the fund flow also.
