Top Ways to Improve Your Accounts Payable & Receivables Process
Every business needs to constantly keep track of accounts payable (AP) and accounts receivable (AR) to ensure the organisation’s smooth functioning. These two processes are responsible for keeping track of the money coming in and going out of your business. It won’t be an exaggeration to say that the combo of accounts payable and accounts receivable hold the key to the success of your business. Businesses that struggle to manage both AP & AR can seek the help of top accounting firms in Dubai.
Constantly keeping track of AR & AP will help you maintain a consistent cash flow and save your business from mishaps such as overpaying your suppliers or not getting paid by your buyers. In this article, we have listed some of the tips on improving the AR & AP process.
1. Reduce Transaction Cycles
Reducing the transaction cycle of the goods bought or sold is a good way of cutting down a lot of unnecessary costs. Usually, a longer transaction cycle leads to lower cash flow. For example, small businesses usually wait for their buyers to pay which can then be used to pay their suppliers.
This affects the cash flow and you need to create short timelines for receivables and payables to streamline the procedure. Your team should be trained to issue purchase orders, invoices, and other documents on certain days of a week or month. You can seek advice from accounting & bookkeeping firms in Dubai for guidance.
2. Follow Up With Old Accounts
As an experienced entrepreneur, you know the importance of recording every transaction made within your firm and issuing statements regularly. However, it is equally important to keep track of old accounts and examine if everything is cleared. If you find something pending, it calls for immediate action to settle that specific transaction and keep the books in order. You can create an internal policy that sets the maximum period you can take to clear a customer’s account.
3. Create Credit Policies
It’s frustrating for entrepreneurs and managers when transactions take a long time to close. This has been a common trend during the pandemic as most businesses struggled with ssh flow issues. Your accounting department, therefore, needs to implement certain credit policies which may vary for different clients. You can provide greater flexibility for regular customers with a history of good credit ratings. However, you need not give the same treatment to first-time customers. In terms of payable, you should focus on paying the suppliers as soon as goods are received in a good condition, thereby cutting down the risk of liability. Does this sound tough? No need to worry, the best accounting firms in Dubai can assist you.
4. Develop Efficient Workflows in Your Management
Your business can enhance the efficiency of AR and AP processes by developing management workflows. Management workflows are the best way to identify the blockages within the system and streamline the processes efficiently. The key features of management workflows include different invoice entry methods, receipt application and reporting, and credit and collection management. These features allow your business to implement current objectives and make any amendments if the objectives change in the future.
5. Track Everything Easily with Automation
It would be tough for small businesses and startups to track the payables and receivables daily. Without a big accounting team, the startups may struggle with the processes involved in the creation of invoices, receipts, purchase orders, shipping orders, receipts, and other financial documents. The company would struggle if a single document goes missing or lost. Accounting firms in Dubai recommend the use of automated software to streamline the transactions and simplify the tracking process. Automation is important for businesses to reduce the risks emanating from human error.
Improve Accounts Payable & Receivable Process with Jitendra Chartered Accountants
Accounts receivable and accounts payable are two critical indicators of a company’s cash flow. It is vital for you to efficiently manage and track them as it would help you make critical business decisions apart from helping you accurately assess the company’s financial performance. Small businesses and startups that struggle to manage the two processes effectively can seek the assistance of accounting firms in Dubai such as Jitendra Chartered Accountants (JCA).
JCA has been providing the best accounting services in Dubai that will help companies improve their financial performance. Our experience of more than 20 years enables us to understand different businesses and cater to their specific needs. Apart from providing the best accounting services in the UAE, we help you with filing VAT returns, internal audits, external audits, filing Economic Substance notifications & reports, and complying with Anti-money laundering requirements (AML). Our cost-effective accounting services help you improve the quality and flexibility of your company’s processes.