Business transactions and managing them is a major task. There are so many transactions that happen every single day when it comes to businesses, it can get quite confusing and cumbersome. Especially when it comes to credit based companies such as credit financing, retail banking and other finance based business, keeping track and monitoring various creditors, accounts receivables and the inflow of credit periodically is very important. Based on this information, the business can come up with yearly and future planning and forecasts. Accounts receivable software is one of the many tools that businesses can use for credit management and to analyse the various accounts or creditors in their business and to create specialised and custom based portfolios for each account.
What is Accounts Receivable?
Accounts receivable is an accounting term which refers to all the parties that owe some sort of credit to the company or business. Vendors in a company for example can be termed as their accounts receivables such as retailers or wholesalers, buying partners, lessors or loaners etc. In a small scale organisation, an accountant is able to keep track of all such accounts receivables and generate portfolios to analyse payments, credits outstanding, credit risk with regards to these accounts and bad debts. But when it comes to credit based companies that handle plenty of creditors or accounts, it can be very tricky to analyse everything over manual sheets or excel workbooks.
This is where accounts receivables softwares can be of great use. These softwares help the finance team, especially the credit officers or the credit management team of the company to get all the information about their accounts at one go. These softwares are able to collate all data with regards to the accounts that the company has and prepare individual specialised portfolios that can be analysed as and when required. It is also helpful in generating reports for credit rating for each account, credit balance of the company, credit outstanding, credit recovery period, credit risk with regards to the account etc.
Based on these special insights the company can perform various important functions and help make decisions for the business such as:
- Planning and Forecasts
A specialised credit management software can help in giving useful insights that can help the company to plan and forecast all decisions basis the current credit analysis and the upcoming credit payments
- Cash and Credit Management
Accounts receivables software is able to analyse each account based on industry standards and help in generating credit to cash conversions and therefore helping the company value its credit limits and make adjustments according to these insights
- Risk Mitigation
Bad debts and risks with regards to credit default can make significant disturbances in a group of accounts and therefore, early assessment using such softwares can help detect defaulters and prevent such incidents in an efficient manner so that the company’s overall credit portfolio and score is unaffected and balanced
- Portfolio Performance
Accounts receivables software can help create individual portfolios for each account and help credit officers to take charge so that the accounts can be monitored more efficiently and diligently. They also help in easier review and management of accounts by generating reports such as percent current and days past and Days sales outstanding reviews.
These are some of the highlights of using a specialised credit management software or an accounts receivables software in a business.