Top tips to Better Manage your Account Payables and Receivables
In every company, accounts payable and accounts receivable are critical to keeping track of money coming in and money going out of the business. However, managing these two can be tough for businesses. Stay on top
Small business owners need to ensure that they stay on top of their accounts payable and receivables. Failing to manage them properly will create cash flow issues that are harder to spot, and this can snowball into major problems. In this blog, we will give you useful tips to better manage your account payables and receivables. Read ahead to know further:
Review All Accounts Payable and Receivable
Business owners need to review all of their accounts, both receivables and payables that are key to the state of their businesses’ cash flow. You must ensure that the money owed to you (receivables) is coming promptly and you have a system to deal with late payers. Make sure you are not missing any significant costs while you are figuring out your payables.
While reviewing your accounts, look for errors and make sure that all invoices are accurate. It will help you ensure that the numbers do not misrepresent the reality of your current situation. Seeking advice from the best accounting companies in Dubai may come in handy for you in this situation.
Beware of Fraud
Always look for fraud, especially with accounts payable. Employee embezzlement can occur and individuals on the receiving end of payables may find ways to take advantage. You can detect and prevent accounts payable fraud by vetting vendors, looking for invoice irregularities, reconciling payable entries with the company chequebook, and looking out for suspicious phone numbers.
Establish Credit Policies
You can offer credit policies to good customers and take advantage of the credit with your own payables. Regular customers having good credit ratings get greater flexibility period for payment. However, first-time customers may not receive much freedom. Most firms set payment terms at 15-30 days. In line with this, your company’s payable department must pay suppliers as soon as the shipped goods arrive in good condition.
Try to stay organised in terms of budgeting or financial practices, which is critical to properly managing accounts payable and receivable. Such practices will help companies ensure that outgoing payments are made on time and that they stay on top of receivables to keep cash flow in a good place. You may find it tough to stay on top of either payables or receivables without getting organised.
Automating your accounts will help you stay organised. You can set up automatic payments through online banking, which will help you prevent falling behind on payments. Your bank can advise you on services that link your payables and receivables to your accounting software. Avail of accounting services in Dubai to get your accounting function automated.
Get Authorizations in Order
Business owners should know who is authorised to sign, pay and collect payments. Knowing who is responsible will help you reduce the risk of potential fraud. Certain companies achieve this by setting up a dual-control system in which two people are required to sign for every expenditure.
You need to create reminders for both accounts payables and receivables. Businesses that do not use auto-pay for some bills may find this helpful as they get reminded when they are due. Even if bills are automatically paid it will be helpful to get reminded that money is being withdrawn from the account. When it comes to receivables, reminders about outstanding invoices can also be helpful in reminding you to follow up on payment.
Have Clear Payment Terms
People involved in a particular transaction need to have clarity on payment terms. You should not be confused about the amount, hidden fees, or the time when the payment is expected. This applies to both accounts payable and receivable. In terms of receivables, you should make your expectations clear on the invoice.
For receivables, you should give your customers options to pay. You may get paid on time if you accept more forms of payment. Try to be flexible and help your customers make payments on time. Keeping up with accounts payable and receivables can be tough for SMEs with few employees and lots of duties. However, being organised can help them maintain a strong cash flow.
Avail of Top Accounting Services in Dubai, UAE
Accounts payable and receivable can be a lot to keep up with, particularly for smaller businesses with few employees and lots of duties. Smart, organized management can help you maintain a healthy cash flow with few errors. For help, you can consult with the best accounting firms in Dubai such as Jitendra Chartered Accountants (JCA). JCA has more than 21 years of experience in the industry, serving companies in a diverse range of sectors.
Irrespective of what type of business industry you are in, we can prepare your financial statement accordingly and maintain your books of accounts as per international standards. Apart from offering accounting services in Dubai and across the UAE, we provide other services such as VAT, AML-CFT compliance, Corporate Tax, Economic Substance Regulations (ESR) filing Ultimate Beneficial Ownership (UBO) filing etc. Contact JCA today for availing our robust accounting solutions.