Poor management of accounts receivables is the enemy of cash flow. For small businesses today, 30-day terms all too often extend to 60, 90 and 120 days before payment is made.
CPAs can help their small business clients better manage cash flow by proactively talking about their payment policies and procedures. Now is the time to help your clients set a 2010 goal of implementing payment acceptance best practices. Why? Because by implementing sound accounts receivable policies with the objective of lowering working capital, businesses will achieve an operational advantage over their competitors.
Business is, ultimately, about getting paid. Businesses need to have enough working capital to fund their operations while they wait to get paid. If a company can improve its processes and get paid a little earlier, this means the company would need less working capital to fund its operations. Companies that use payment technology to run more efficiently require lower working capital.
And a lower working capital requirement in turn reduces the costs of financing working capital. Financing working capital can come from many sources (some more expensive than others). With the tight credit market small businesses are currently experiencing, implementing AR best practices can reduce credit risk, automate manual paper-driven processes and provide skilled invoice follow up support – which combine to produce a more efficient payment cycle.
At VantageB2B.com, our analyst work with small businesses and their CPAs as payment advisors, delivering professional payment resources combining AR best practices with Level 3 commercial card payment acceptance to lower costs, increase productivity and enhance security.