Let's briefly analyze the professionals & cons of sending AR Statements & you could pick whether it is important or not to have it as a part of your accounting procedure.
Sending AR statements is a standard accounting practice followed by lots of companies. However sending AR statements cost hard work & time while in lots of cases not yielding any tangible benefit depending on the size of the organizations. Huge organizations may not provide statements unless requested & feel that it is a waste of paper with small impact on collections while a small business may find statements handy. It is simple to misplace invoices since small business procedures are not as well developed as in larger organizations.
Pros-
- AR statements are the financial gizmo of communication with the customers. While most clients pay only from invoices, statements are a actual reminder to those clients that know that they are sitting on your working capital
- Statements are reminders of outstanding amounts & give the customer a chance to challenge incorrect charges to their account that they would otherwise not be aware of. This helps in building customer relations
- Helps in reconciliation & resolving issues with customers on documentations faster
- Sending A/R Statements could help uncover a fraud process
- Sending AR statements also helps you calibrate your move to more aggressive collection efforts. Otherwise, you permit your customers the excuse of basically explaining, "Well, I seldom received your bill."
Cons-
- Lots of huge organizations think that sending AR Statement is a waste of paper (& postage) with small impact on collections
- Some accounts that do request statements are more interested in finding elderly credits they can apply than worrying about what is due or overdue
- Some think that than sending statements, the more effective option may be to personally contact the customer on specific over-due invoices. This can be completed by phone, e-mail or automated electronic e-mail delivery
Conclusion
- There's utility programs that will monitor your information & send out automatic e-mail reminders to your customers based on days outstanding. Unlike AR statements, no postage, labor or human action is necessary in this process
The key to efficient collections is to know how your customer pays- do they need copies of receipt docs & POs or possibly a proof of delivery document. Each office has their own processes & idiosyncrasies that A/R personnel need to understand & work around. The faster you provide what they need the faster you get paid. This may need phone calls to smooth the way like a follow-up to be sure they have everything they need & that it is entered in the process. In the event you are currently providing statements, you might try not sending them for a month to see if someone notices or cares. In sum, the worth of statements depends on your situation & customers.
Sending AR statements is a standard accounting practice followed by lots of companies. However sending AR statements cost hard work & time while in lots of cases not yielding any tangible benefit depending on the size of the organizations. Huge organizations may not provide statements unless requested & feel that it is a waste of paper with small impact on collections while a small business may find statements handy. It is simple to misplace invoices since small business procedures are not as well developed as in larger organizations.
Pros-
- AR statements are the financial gizmo of communication with the customers. While most clients pay only from invoices, statements are a actual reminder to those clients that know that they are sitting on your working capital
- Statements are reminders of outstanding amounts & give the customer a chance to challenge incorrect charges to their account that they would otherwise not be aware of. This helps in building customer relations
- Helps in reconciliation & resolving issues with customers on documentations faster
- Sending A/R Statements could help uncover a fraud process
- Sending AR statements also helps you calibrate your move to more aggressive collection efforts. Otherwise, you permit your customers the excuse of basically explaining, "Well, I seldom received your bill."
Cons-
- Lots of huge organizations think that sending AR Statement is a waste of paper (& postage) with small impact on collections
- Some accounts that do request statements are more interested in finding elderly credits they can apply than worrying about what is due or overdue
- Some think that than sending statements, the more effective option may be to personally contact the customer on specific over-due invoices. This can be completed by phone, e-mail or automated electronic e-mail delivery
Conclusion
- There's utility programs that will monitor your information & send out automatic e-mail reminders to your customers based on days outstanding. Unlike AR statements, no postage, labor or human action is necessary in this process
The key to efficient collections is to know how your customer pays- do they need copies of receipt docs & POs or possibly a proof of delivery document. Each office has their own processes & idiosyncrasies that A/R personnel need to understand & work around. The faster you provide what they need the faster you get paid. This may need phone calls to smooth the way like a follow-up to be sure they have everything they need & that it is entered in the process. In the event you are currently providing statements, you might try not sending them for a month to see if someone notices or cares. In sum, the worth of statements depends on your situation & customers.
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