One of the most important tasks you can do in accounts receivable is run an analysis in your department to see where you stand. There is no way to continue improving at your job if you don’t know how you’re currently doing and where you have room for improvement. Accounts receivable often has a larger impact on the business as a whole. If the department is not collecting the available cash, credit terms can’t be extended to other customers, hindering the sales department. This impacts the ability of the business to make investments in new employees, equipment or larger marketing campaigns, which stunts growth of the business.
By running weekly or monthly analyses on the department, you can catch any issues arising before they occur. This helps put your department and your business in a better place. Below are important accounts receivable financial reports to keep your eye on to ensure your collection efforts are working efficiently.
Although the balance sheet includes information that is pertinent to other areas of accounting besides just the accounts receivable department, it’s still important for the credit and collections manager, or manager of the accounts receivable department, to have a full view of the business. The balance sheet shows the company’s assets, liabilities, cash, accounts receivable, inventory, accounts payable and loans. This helps to put goals in place and perspective for the manager to understand how much they must collect in order to keep the business profitable.
STATEMENT OF CASH FLOW
This financial report helps to give a clear view of how much cash is going in and how much cash is going out. By comparing this month over month, the accounts receivable department can be on the lookout for any unfavorable trends and start making efforts to fix them.
ACCOUNTS RECEIVABLE DAYS
Measuring your accounts receivable days is probably one of the most important financial reports to keep an eye on. Your accounts receivable days is the bottom rung of the pyramid that has a domino effect on the rest of the reports you will run. If you have issues or trends in the other reports with cash flow or accounts receivable, it likely boils down to how your accounts receivable days look. Your accounts receivable days measures how long it takes from the point of invoicing to when your customers pay you. If your accounts receivable days begin to take longer and longer before receiving payment, it’s time to reassess your collection methods.