Accounts Receivable Tracking

Written by Patricia Tunstall
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Accounts receivable tracking is part of an efficient accounting system, which every business must have. Even if the owner of a startup enterprise does the books, certain standard practices should be used to ensure accuracy and completeness. One of the most important aspects of any size business is accounts receivable because they directly affect cash flow.

Whether the owner or a certified public accountant takes care of the financial factors of the business, the invoices must be tracked, so daily or weekly monitoring of amounts and ages is possible. Account aging is a formal method of following accounts in order to maintain control over payments and due dates. An aged 60-day account, for example, would be tracked more closely as the due date approaches to enable the owner or accountant to start phoning the debtor as soon as it is one day overdue.

Tracking Provided by Factors

An invaluable service offered by most factors is comprehensive tracking of accounts receivable. This means that customer credit limits are set and monitored so the runaway situation that led a business owner to need a factor does not repeat itself. Careful credit polices are put in place and they are clearly understood by all parties; they are also enforced.

In this way, factors organize and supervise the money owed to their clients, the business owners. By bringing discipline into the accounts receivable aspect of the business, factors do more than just provide essential cash. Tracking accounts receivable brings certainty and planning to a part of the business that can easily slip away from a small business owner who must also look to increasing sales and bettering a product.

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