Accounts Receivable is the process of billing and collecting money that is owed to you. Managing Accounts Receivable is vital for good cash flow management.
It is very common for distressed businesses to have a poor record for collecting their Accounts Receivable.
- This has a direct and immediate impact on your cash flow.
- And on the financial health of the business.
Do you find yourself struggling to understand the accounting terminology? Then invest some time with an accountant.
Alternatively, get advice from someone who is more familiar with accounting processes.
Carry out a major review of your Accounts Receivable system early in the Turnaround90 project. It is very important.
Go to the article: How to Boost Your Accounts Receivable
Accounts Receivable is discussed in greater detail.
To learn about the Cash Conversion Cycle, which looks at money in and money out, go to the article: How to Measure Net Cashflow.
Until you have cash in hand, you cannot use your debtors to cover your cash outflow.
So, managing Accounts Receivable is vital. And it should start as soon as possible, even if you are OK at the present time.
Start to implement cash flow controls ASAP.
This is because of the built-in delays getting paid by your clients (30-120 days often)
For more help understanding any issues relating to this Section of the Turnaround90 Campaign, use the 12Faces Diagnostic System to drill down to root causes of problems and find our suggested Treatments.