Industry Best Practice Requires Good Accounts Receivable Training

Businesses must keep their finances tidy in order to run efficiently and smoothly. Unfortunately, all too many businesses owe money or are owed money, and without a good system in place to track it, expenses can fall through the cracks. Good accounts receivable training is a must for employees, and it can mean the difference between succeeding or failing financially.

What Is Accounts Receivable?

Accounts receivable is the bookkeeping service of tracking expenses. A ledger is used to track where money is being spent, and tracks company invoices—knowing who owes them money. Some industries are better at making payments than others. For example, when an invoice is issued to a private customer, payments are made at the time of service. However, when a service is performed for a large corporation, invoices are generally given several days to get paid—usually thirty days. Allowances are made for late payments because accounting offices can sometimes take several weeks to pay bills, depending on how many invoices they must pay per month.

Example of Invoicing Flaws

If your company is not keeping track of who owes them money, several invoices might not actually get paid and are forgotten about. The construction industry is infamous for this. An engineer or consultant will bill an architectural firm for his service and expertise on a project. The architect bills the owner for those services as well as the architectural fees involved. The owner might not want to pay for the whole amount until the project is done. As a result, the owner does not pay the architect, who therefore cannot pay the consultant. This goes on until the project is completed, at which time the owner might run out of money and cannot pay the entire amount owed. If that happens, no one will get their money and law suits are filed. The trickle effect means that if an architect does not have the assets available to pay the consultant directly, the consultant might have to wait several years to get paid. If the consultant does not have a good invoicing system in place, he will not be able to push for money owed.


Good Training

Large corporations usually have certified accountants handling all ingoing and outgoing cash flow. Small companies, however, usually use their receptionist to do the job, if they even have the extra help. Their employees need proper accounts receivable training to help them overcome the hurdles in a somewhat complex industry.