Most business owners are well aware of what accounts receivable means but, in case you are just learning the ropes, check out these 3 fairly curious facts you need to know about it!
What does “accounts receivable” mean?
Payments that are still processing or unpaid orders are typically filed under the category of accounts receivable. This simply means that the money is coming to you, you just haven’t received it yet.
For example, a paycheck is considered an “account receivable” to an employee, because you have already worked the hours to earn the money, you just haven’t yet received your payment.
Why do accounts receivable matter?
These type of accounts matter to businesses both big and small because they indicate that your business is still growing and customers are still interested in the products or services you offer.
How can a business owner ensure he or she receives payment?
The best way to ensure that you are able to receive a payment for the goods or services that you offer is by establishing the terms of the credit before an account receivable is set up. This will also make sure that both you and the client or customer are on the same page when it comes to the terms of repayment. These terms will need to be calculated based on your inventory, sales rate and other internal statistics. You could also look at offering your customers a small reward for paying for their orders on time or early. If a client is late on a payment, you may have to start adding on late payment fees and perhaps even pass it on to collections.
Accounts receivable can be a rather integral aspect of any company. If you are planning to develop a payment plan or grace period for your customers, it’s important that you know these 3 curious facts about accounts receivable.
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