Ways to Manage Accounts Receivable Efficiently
There is a direct relationship between your firm’s growth and its working capital requirement. As your sales grow, your level and composition of working capital, namely, Inventory, Receivables, Cash, Payables, Short Term Loans etc. will also change. Accounts Receivables (AR) is one of the major components impacting the requirement of working capital. AR is a result of sales made to the customers on credit. A business can benefit from selling its goods and services on credit, thereby resulting in increased profits but at the same time, credit sales act as a stumbling block of funds and there can also be a possibility of bad debts due to defaults in payments by the customers. Therefore, it is essential for the business to carefully analyze and invoice on credit only to its reliable customers.
Accounts Receivable Outsourcing involves ensuring timely collection of dues from its customers and managing the whole process in an organized and professional manner. AR helps in analyzing deeply the overall health of the business.
Some of the issues faced by businesses today make a compelling argument in favor of outsourced AR management.
- Despite of rigorous follow ups with the customer, sometimes the business ends up writing off the bad debts since the employees do not find them worth their time.
- It happens that you decide on aggressive collections say during a quarter or year-end but end up denting the relationship with some customers.
- Lack of professional awareness on managing working capital issues hampers day to day operations. While everything looks good in terms of incremental sales but slow recovery ends up hitting your profitability.
- A lot of money parked in accounts receivable reflects on poor business acumen. Investors or lenders do not find such businesses attractive thus hitting your growth and expansion plans.
- Increased cost of funding from the banks in the form of Over Draft or other Working Capital Loans because of blockage of funds in working capital.
- Frequent cash squeezes making it difficult for you to honor your financial commitments thereby impacting your credit worthiness in the market.
Conclusion- Good account receivable management is the life blood if not the heart or brain of one’s operations. Poor account receivable management along with other factors have led to falling of great enterprises and with laws such as the Insolvency and Bankruptcy Code in place, it is better that we have the cash flowing and never dishonor on outstanding commitments.
AR management is a professional process which helps you strengthen your receivable position and broadly includes the following activities;
- Assessing the customer’s credit rating.
- Advising on matters relating to supplier contracts, invoicing and bookkeeping.
- Help reach a balance where customers’ needs and the firm’s credit policy are in line.
- Making recovery faster while maintaining good customer relations ensuring a more collaborative environment.
- Ensuring Bad Debts are detected in timely manner and advising on ways to mitigate risks leading to ‘debt turning bad’ situation.
- Timely scanning and monitoring customers for credit risks.
- Entertaining customer concerns.
- Collection Management.
Some tangible benefits that do arise on outsourcing AR Management include but are not limited to the following;
- Strong financial position which leads to increased credit worthiness and decreased financing cost.
- Receive a summarized report on AR position and recovery with a review of Service Level Agreement (SLA) matrix, performance and Turn Around Time (TAT) compliances.
- Shortening Payment terms.
- A Standard Operating Procedure on Bill Dispute Resolution Process.
- Proactive approach to AR management including early intervention to decrease the amount of avoidable write offs.
- Increased promoter/senior management efficiency because the time is now allocated to vital activities necessary for growth and smooth operations.
- Faster recovery of funds and efficient allocation to short term investment avenues such as Government Bills leads to increased Return on Funds or Capital Employed.
- Time to Time advisory and consultancy relating to good AR management practices.
11 Qualities of a Successful Financial Advisor
What is a Financial Advisor?
For a corporate, financial advice at the right time and by a right person is an important aspect. If they are earning good amount of profit but they are not investing it on the right place with the right timings, corporate cannot grow for the long run.
And now to fulfill it, a corporate needs a good Financial advisor with all the required traits who can advise them in determining an Investment portfolio and also help in achieving the financial goals. Advisory services tackles all aspects of business from managing finances, marketing your product or service better and more widely, embarking on research and development activities, to improving your operations.
Traits That Successful Financial Advisor Must Have
1. Excellent organizational skills:
A financial advisor encompasses a set of capabilities like to plan, prioritize, and achieve the goals of a corporate. The ability to keep work organized allows to focus on different projects without getting disoriented or lost, thereby increasing productivity and efficiency in the workplace.
2. Knowledge and Expertise:
It’s important to hire a financial advisor whose investment knowledge and educational background meets your requirement. Make sure to ask your potential financial advisor about their planning view for the short run as well as in the long run.
3. A Deep Analytical Ability:
A financial advisor should know that the risk and return relationship drives almost every aspect of a financial plan. Structuring an investment portfolio, the proper way and being able to reallocate the assets as time and goals change is crucial. It is important for a financial advisor to be able to analyze and plan a portfolio in the context of a variety of statics metrics.
4. Goal Clarity:
He should be clear in the goal to take the decision and plan the things in the in the way required.
5. A good leader and a mentor:
A financial advisor should be a good leader and direct the client & its business in the best possible way. He should be a trusted mentor to the clients so that he can guide them in figuring out the mistakes and lead them on the right path.
6. Attentiveness :
As said above, he should be attentive enough so that he can take the right decision in the right time to gain the benefit.
7. Positive attitude:
Your financial advisor should be a person with positive attitude and always can see the company’s future bright. He must have the ability to handle the things with positive attitude, even in the difficult time of the company.
Trust is the essential key to be a good financial advisor. If he is not trust worthy as a person, how can you trust them to handle your finances? Your financial advisor should be someone that you can feel comfortable forming a relationship with long-term and you can share each and every aspect of your corporate with him.
9. Clear communication:
A good financial advisor must have the ability to explain his words in a layman language. So that a person with any kind of educational background can understand and interprets the things easily. He must have the ability to teach, guide and advise you.
Ever Corporate has their own “wish list” of what they want in a financial advisor. A financial advisor must be flexible enough and have all the techniques so that he can meet their expectations.
The most important thing, he should ask reasonable fees while playing the role of financial advisor.
In this competitive era of vast modernization, maintaining your existence in the business industry is a tough task. In every vertical whether it be services, education, legal or business; there is an arduous competition. Every organization is trying to step on its rivals to move ahead and stay at the curve. In this world of prodigious opportunities and complexities, business organizations are looking forward to establish new connections and are finding new ways for innovation.
Running thriving business these days has become a grinding and a frustrating experience. The good news is that it doesn’t have to be the same way now. With adequate advisory services at every step, running a successful business is turning to be a fruitful and exciting adventure. Excited, right? Well you’d be.
Before diving deeper let’s have a closer look to what advisory services are:
Advisory services are provided with the goal to support undertakings and overcome weakness in specific areas like finance, business, legal etc. A range of business advisors are bestowing best-in-class services to help organizations perform up to the ballpark and become a sovereign. Nowadays, start-ups are showing rapid growth in the industry, but the thing they lack is advisory service. Proper advisory services are required by every organization out there to leave a blemish on the audiences mind and the stakeholders too.
There are a plethora of advisory services like business advisory services, finance advisory services, legal advisory services, investment advisory services, corporate advisory services and much more.
Now that you’ve came across what advisory services are, you must be wondering about. Who business advisors are? So, we’ve got you covered!
What are business advisors?
Business Advisors are proficient and independent experts who use their old-hand techniques and practices to guide and support you in specific business verticals which make a huge difference to your business success.
Importance of Advisory services for your business:
Advisory services are the keys to unlock your success!
Are you aware where your business is going? Are you aware who your target customers are? If you said no, it’s high time. You should definitely look for advisory consultants in order to save your sinking boat.
These days it’s arduous to talk about accounting profession without incorporating the words “business advisory services”. Advisory services are a huge need for every business organization out there. No mater you are a corporate giant or a just born start-up, you need advisory services at every step towards your success.
We’ve listed up some major factors that show how advisory services can help your organization to perform next level.
• Advice on Financial aspects:
Financial aspects are the backbone of every business organization. Whether you want to invest in your previous infrastructure or looking to expand your venture, you need proper financial strategies to remain at the top. Some financial advisors are offering services like investment advisory services, accounting advisory services and numerous others.
• Increase the profit:
If your organization’s profits were good but are suddenly facing downfall, it’s good time to get assistance from business advisories. Business advisors will re-imagine your business structure and with their strong ideation they’ll help you to manage and re-organize strategies to thrust your business like never before.
• Structure and effective business plan:
Business Advisory services will help you to prevent some crucial mistakes that your company often makes while trying to expand its venture. Expanding your venture is a major decision. In some cases, the urge to increase profits forces business owners to take early decisions which in-return brings huge losses and destruction. A proper planning is indispensable before taking such huge steps.
• Identifying market growth:
For business possessors it can be very fruitful, when their business thrive and they’re able to expand their business. But they lack somehow in identifying the market growth. The rigorous pace of growing market is really volatile and business owners face difficulties to cope up with the changing needs and requirements. A reliable business advisory firm can help business organizations with formulated techniques and strategies to conquer the difficulties.
• Technology-driven Solutions:
Technologies are revolutionizing every sector with its fast pace of evolution. Some businesses fail to take the advantages of technology and start losing their customers to others, who are more technologically advanced. Business advisors not only help you to cope with financial difficulties but also muster you for technological advancements to again hold the grasp and rule the market.
Having a reliable advisory firm at your side is a plus point. There are several companies offering best-in-class financial advisory services in Delhi and other regions and you should definitely avail one to charge up your business.
The corporate environment is dynamic involving uncertainties and risks. These uncertainties and risks drive business organizations to take complicated decision to survive in the market. Since the primary goal of any organization is to improve its profitability and sustain in the long run. Hence, any business establishment cannot afford to ignore the importance of MIS.
What is MIS?
Management information system or MIS is a set of procedures that provides essential data and information to the management for making an informed decision. The Management information system involves:
- Collection of appropriate data from various reliable sources.
- Processing of such data to extract the relevant and useful information.
- Delivering this information to the respective department.
Why are MIS Reports so crucial for business decision-making?
MIS report of a company is prepared after proper analysis of current data and recent trend prevalent in the market. The primary purpose of MIS reporting system is to provide critical business information to the management for complex decision making. Since, it is essential for the administration to have reliable information related to the current market trend and relevant business data for making a quick and informed decision. Management information system report plays a crucial role in improving performance, productivity, and profitability of the organization.
Thus, MIS reporting system serves as a backbone of the company, and it helps the organization to stand firm against the competitors.
Advantages of MIS and reporting
1. Helps in managing data
MIS helps in maintaining and managing crucial business data for assisting in complex decision-making by the management. The critical information is stored in an organized manner, and it can be accessed by the administration quickly whenever required.
2. Analyses trends
Management needs to prepare forecasts for strategic planning and determine future goals. Thus, to create such a strategy, it is essential to have accurate reports on prevailing market trends. MIS uses various mathematical tools for analyzing the current market trend and predicting future trends based on such information.
3. Helps in strategic planning
MIS reports play a significant role in the strategic planning of the company. It helps in determining the future needs of the company and assists in formulating goals and strategy based on such information. Management information system report is also helpful in identifying resources required to meet the company’s objective. Thus, it is vital that the information provided by MIS and reporting is accurate and reliable.
4. Goal Setting
For any organization, setting up a goal is very crucial matter, and it requires lots of research and development. Since the information provided in MIS reports is based on current data analysis, hence it is considered suitable and material for determining the goal of an enterprise. Also, MIS reporting includes the current market trend analysis and prediction of the future trend. Thus, it is quite difficult for any company to neglect MIS and reporting.
5. Problems identification
MIS report provides information related to every aspect of activities taking place in the company. Hence, in case any problem arises in front of the management, MIS reports are quite helpful in identifying the source of the problem. Also, MIS and reporting are really useful in finding the solution to such an issue.
6. Increases efficiency
The relevant information provided by MIS and reporting is utilized in formulating goals and strategy of the company. Also, the performance of the business can be assessed with the help of MIS reports. Hence, MIS plays a vital role in increasing the efficiency of the company.
7. Comparison of Business Performance
The relevant business data and information of the company is stored and maintained in the MIS database. Since the MIS database can be accessed at any time; hence, the current performance of the firm can be compared with its previous year’s achievement to measure the organization’s growth.
How to prepare MIS reports?
MIS reports are very important for business decision-making thus it must be prepared with due care. Since an inaccurate MIS report can cause the business to suffer severely, therefore, the accuracy of the statement must be ensured. A firm can either hire staff for creating MIS reports or outsource the process.
Hiring staff for MIS and reporting is quite expensive for a company, and also, it does not ensure the accuracy of reports. It is better to outsource the process as the company will receive the services of experts at minimal costs as compared to hiring staff for MIS reporting. Also, outsourcing MIS reporting process is cost-effective and saves precious time of the management.
Today, India has evolved as one of the top outsourcing destinations in the world. According to a survey conducted by NASSCOM, India is among the leading outsourcing countries across the globe.
India’s growing popularity in outsourcing industry can be attributed to its highly talented human resource, finest quality services, cost-efficiency, and professionalism.
At present, India offers a wide range of outsourcing services in different industries such as IT, Accounts, Finance, etc. Today, the trend of accounts outsourcing to India is gaining momentum due to various factors such as access to the accounting experts at lower cost, top quality services, and an ideal time zone.
What is outsourcing?
Outsourcing refers to the business practice where companies hire other firms to perform their internal business activities on contractual basis at affordable costs. Companies prefer outsourcing its various business processes to cut down their overall cost and save time to focus on its core business activities. Services like finance and accounting outsourcing , payroll services , virtual cfo and many more are outsourced by Aristotle Consultancy.
There are various benefits of outsourcing such as:
India offers high-quality accounts outsourcing services at flexible prices as compared to other countries. By availing accounts outsourcing services from India, a company can reduce its cost significantly and save time to focus on its core business activity. Also, by saving time and money, companies are in the position to take risks for improving productivity.
The time zone of India is favorable for foreign countries since IST is 5:30 hours ahead of coordinated universal time (UTC). This time gap allows outsourcing services in India to deliver the project within the specified time limit. Thus, it accelerates normal working of a company which in turn improves productivity.
Infrastructure and technology performance
India has a well-developed infrastructure and facilities such as good cellular connectivity, latest technology, etc. These facilities enable outsourcing industry in India to provide services without any disruption. Also, the availability of advanced tools and technology ensures the standard quality of service
Although Indian accounts outsourcing firms offer its services at the affordable price range, the quality is never compromised. That is why outsourcing services in India are gaining popularity day by day. The accounts outsourcing companies employ highly skilled individuals to ensure that essential data of clients are treated with due care and accuracy.
Economy and political environment of India
The economics of India is stable, and along with it the political environment of the country is favorable for the growth in the outsourcing industry. The nation’s legal system is sound and supports trade and commerce activities. The taxation policy, specific reforms, and significant investment policies are the key factors that help in strengthening Indian economy. Therefore, the possibility of default by Indian outsourcing firm is fewer.
The accounts outsourcing firms in India are well-known for their professionalism and top quality service. Thus, clients need not worry about the performance, confidentiality, and quality while dealing with Indian outsourcing firms.
The top MNCs in the world prefer to avail outsourcing services in India. The primary reason for choosing Indian firm is good quality service, professionalism, confidentiality, and cost-effectiveness. Also, the time zone of India is favorable thus ensuring the delivery of service on time.
The Indian population is equivalent to approximately eighteen percent of total world’s population. Every year huge number of students in India completes their graduation. It means that country’s workforce is getting stronger and therefore India has the potential of offering high-quality service at flexible prices.
Large Pool of Talent Resources
The countries like US and UK prefer to hire Indian companies for outsourcing various business processes. The Indians are famous worldwide for their talent and hard work which makes them more desirable on a global level. Whether it is IT industry, Healthcare industry or Accounting and Finance industry, Indian talent has proved itself in every field. Thus, India has a large pool of talented individuals in every sector.
No Communication Barriers
The significant portion of India speaks English as compared to any other country in the world. Therefore, communication is not a barrier while dealing with Indian firms.