5 min read

A few tips to help businesses manage accounts payable & accounts receivable!

manage accounts receivable and payable

When it comes to running a business, it becomes critically important to learn some skills to manage your accounts payable (AP) and accounts receivable (AR). Tracking what you owe and what is your sales can become a challenge, especially if you have to manage hundreds of different transactions every day. This is where the two departments – accounts payable (what you owe) and accounts receivable (what you’re owed) come into play. These two departments work harmoniously together to track the money coming in and going out. 

Staying on top of these accounts brings a challenge that every business face. Doing that can significantly help businesses track their progress in the market. 

Tips to manage accounts payable (AP) and accounts receivable (AR)

Review all accounts payable and receivable 

Making it a habit of reviewing all your accounts payable and receivables can help build a strong foundation for your business. This will also allow you to manage your cash flow efficiently. Knowing whether your payments are coming in on time can put a definitive structure to your accounts. In general accounts payable refer to short-term debts (usually the items that are to be paid off in the next 12 months). Long-term debts are liabilities that are usually not considered in AP. although they are to be excluded in AP, they still should be accounted in cash flow management. 

Beware of fraud

It is essential that one should always keep an eye up for fraud, especially when it comes to accounts payable. This is where most embezzlements take place. This is why we always recommend businesses should keep complete track of their AR/AP. Tools like Paci can help you with this. Paci can help you keep a track of both AR/AP, leaving no space for any fraud. 

Establish credit policies

It is always good to offer credit policies to customers & take advantage of credit with your own payables. One of the major challenges that managers face is with the time a transaction takes to close. This is why it is important that the accounts receivable department set strict credit terms. The most common measure that the receivable team takes is to give flexibility in the payments to regular customers while not being flexible with first-time customers. According to the receivable department terms, accounts payable will pay suppliers. 

Always be organized

When it comes to finance management, it is very important for businesses to stay organized. When you are organised with your finances, you get a chance to stay on top of your receivables to cash flow, getting you to a good place. Finance management software like Paci helps you with this. You can keep a check on your money with software like this by tracing the money coming in and going out with every transaction. 

Benefit from automation

Automation is another huge way of being organized with your business finances. With Paci, you can set up automatic payments with an online banking feature. This feature also helps you in avoiding any delays in the payments. 

Use reminders

Setting up reminders for both accounts receivable and payable can help you be on top of your business finance. This is especially important when you have not set up auto-pay. 

Make solid payment terms 

Everyone who is involved in any transaction must understand all about the payment terms. Being aware of the payment terms can help clear any confusion about the amount, hidden fee, etc. This goes for both receivables and payables. 

All these tips will prepare you to be on top of your accounts all the time. Right from recording all the transactions to setting reminders for receivables & payables can bring a solid financial structure to your business. Tracking AR/AP can also give you an idea of how your business is doing. 

Luckily there are many finance management software available in the market like Paci Finance that allows you to automate and track all your AR/AP cycles. We highly recommend you try out Paci Finance now. 

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