🟡 Intermediate 15 minintermediate path
Accounts Receivable: Getting Paid Faster
Accounts Receivable (AR) covers everything from invoicing customers to applying payments to writing off bad debt.
Learning objectives
- Issue clean invoices customers pay quickly.
- Age receivables and manage collections politely.
Step-by-step
1. The invoice
Every invoice needs a unique number, date, due date, itemized description, taxes, total, and remittance instructions. Ambiguity delays payment.
2. Terms
Net 15/30/60 sets the clock. Offer early-payment discounts (2/10 net 30) when cash matters more than margin.
3. Aging and collections
Weekly aging report. Friendly reminder at day 5 past due, second at day 15, phone call at day 30, escalation at day 60.
4. Write-offs and allowance
Uncollectible balances are written off against an allowance for doubtful accounts — protects the balance sheet from surprise losses.
Key takeaways
- Issue clean invoices customers pay quickly.
- Age receivables and manage collections politely.
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