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In most companies, sales are given a strong priority over the risk of slow payments and bad debts regardless of gross margins and the resources the credit and collection function can provide to mitigate risk. Photo by Piret Ilver on Unsplash ) Too often, credit and collections are an afterthought.
The primary source of cash inflows for most firms are the receipts from payments of open customer invoices - i.e., your AccountsReceivable (AR). Other common inflows may involve rent you charge, royalties, and financing, all of which are easy to forecast. More About Purchasing Credit Reports
These are the expected receipts for each period you forecast. The major source of cash inflows for most firms are the receipts from payments of open invoices - i.e., your AccountsReceivable (AR). You will also need to account for a certain level of disputedinvoices.
Whether you have automated the collection process or not, mapping out collection strategies for the different types of customers in your accountsreceivable (AR) portfolio is an accepted best practice. Are there past-due accounts you are trying to collect?
Businesses have been digitizing ever since the introduction of accounting software in the 1960s. Your Virtual CreditManager is a reader-supported publication. To receive new posts and support my work, please subscribe for just $5 per month ($49 yearly). Do you need help improving cash flow?
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