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When small and medium businesses do not adequately manage their accounts receivable , they only risk their cash flow , as well as the possibility of meeting their own payments and the health of their finances ; putting into play its production processes, its logistics, the relationship with customers and even the work environment.

Customer credit is essential to generate more income and, of course, it must be part of the sales strategy . But if it is not managed in an orderly and intelligent way, it creates many problems and hits the solvency of the company. Today we want to share with you two fundamental practices so that you avoid falling into this common mistake that causes the closure of so many businesses like yours.

What is accounts receivable management?

Let’s start by clarifying what we are talking about so that you understand the importance of this process.

The administration of accounts receivable is related to the management of credits and payment terms granted to customers and includes the following processes:

  • Define and adjust each year the credit policies of the company.
  • Control the billing and payment conditions established in each document.
  • Manage collection .
  • Follow up on communication with customers and reminders of payments or delays.
  • Analyze and adjust credit conditions for each client.
  • Manage the debtor portfolio .

This process is key to maintaining healthy cash flow and ensuring that the business can pay its commitments, meet payroll, or take advantage of an investment opportunity. Your goal should always be to keep in check the costs and risks involved in giving a customer the ability to settle an invoice in 60 or 90 days while in turn offering buying incentives to prospects and new customers.

Two key actions

To optimize the management of accounts receivable, there are two key actions to consider: the first is to work together with your Accountant on balanced credit policies that ensure a healthy cash flow ; but that also allow sellers to have tools to attract and keep customers and even increase the average purchase ticket .

The second fundamental action is the automation of the collection process through systems that allow capturing information from the entire purchase-sale cycle , keeping it updated and keeping better control of the relationship with customers and collections. Imagine all the mistakes, problems, and delays it would take to do it manually like in the past.

There are no excuses! Now small and medium-sized enterprises (SMEs) have access to a wide variety of business management platforms that are  easy to use, affordable in terms of costs, and allow full control of the collection process.

In this case, the most useful function of these systems is that of the “customer file”, through which you can consult the account statements of each client, the products on hold, orders pending delivery, monthly purchases, etc. scheduled appointments and, of course, the age of the balances. With all this information updated and registered automatically from the different sources of information (for example, the cashier of each branch) it is possible to give precise and detailed follow-up on the debtor portfolio both in national and foreign currency and detect problems to better manage the collection.

Another great advantage of these modern business management systems is that they can be accessed and used remotely over the Internet . Learn more about this feature at Aspel SAE Cloud .