Accounting for Entrepreneurs
If you're having trouble staying on top of accounts receivable, your revenue stream is in serious jeopardy. Keeping a detailed account record for each of your customers can quickly turn things around.
Small business accounting can be simple or highly complex.
In the area of accounts receivable, it's probably enough to keep track of individual invoices and the total amount of receivables that are outstanding, right? Maybe not. Accounts receivable is an area where a little complexity can go a long way toward improving your bottom line.
Here's why: When receivables accounting lacks detail, you forfeit your ability to monitor revenue on an granular basis. You can review outstanding invoices. But a single invoice doesn't give you the history or background you need to make informed decisions about how to handle a delinquent account.
An account record system puts detailed customer information at your fingertips. Most accounting software makes it easy to create a client account record database. If yours doesn't, you'll need to create a spreadsheet or other vehicle for tracking your accounts. Either way, here's what you need to know.
Customer account records are a one-stop source for data about the customer's business, contact information and transaction history. If the account record is missing critical pieces of information, it's usefulness for collections and other purpose will be limited. Standard customer account forms typically include data fields for a broad range of information including corporate name, account number, contact names (and numbers) and the date the account was opened. Additionally, the form should contain ample space to record information about individual invoices and the current balance owed to your company.
Account Record Uses
Accounting and collections staff use client account records as part of their daily work routines. But they aren't the only staff members who need access to these records. Sales teams should consult client account records during the sales cycle to reduce the amount of time they invest with deadbeat customers. Likewise, customer service staff should have easy access to this information because it lets them address delinquencies when the customer needs product support. In extreme cases, attorneys may use these records to document customer histories in legal proceedings.
If possible, explore the idea of integrating each customer's account record with CRM and other business applications. By locating this information in a centralized database, you increase its usefulness to your business and maximize the ROI of your business software.
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