Accounts Receivable Management by AFHBookkeeping

Welcome to AFHBookkeeping

At AFHBookkeeping, we specialize in providing comprehensive accounts receivable management services to help businesses optimize cash flow, reduce outstanding payments, and maintain healthy customer relationships. Our experienced team understands the importance of effective accounts receivable management and is dedicated to delivering reliable and tailored solutions to meet your specific business needs.

Understanding Accounts Receivable

Accounts receivable arise when a company provides goods or services to its customers on credit. It represents the amounts owed to the business by its customers. Accounts receivable are considered an asset on a company’s balance sheet because they represent the future cash flows expected to be received from customers. The net realizable value of accounts receivable is the major factor in determining their overall value.

Accounts receivable are typically classified as current assets because they are expected to be collected within a short period, usually within one year. They are an essential component of a company’s working capital and play a crucial role in maintaining a healthy cash flow.

Calculating Net Accounts Receivable

Net accounts receivable is determined by subtracting the allowance for doubtful accounts from the total accounts receivable. The allowance for doubtful accounts is an estimated amount representing the portion of accounts receivable that is expected to be uncollectible. By deducting this allowance, companies can report a more realistic value of their accounts receivable that reflects the expected cash inflows.

To calculate the net accounts receivable, use the following formula:

Net Accounts Receivable = Total Accounts Receivable - Allowance for Doubtful Accounts

By monitoring and evaluating the net accounts receivable, businesses can gain insights into the collectability of their receivables and make informed decisions regarding credit policies and collections strategies.

Reconciling Accounts Receivable

Reconciliation of accounts receivable is an important process to ensure the accuracy and integrity of financial records. It involves comparing the balances in the accounts receivable ledger with supporting documentation, such as customer invoices and payment receipts. The purpose of reconciliation is to identify and resolve any discrepancies or errors, ensuring that the reported accounts receivable balance is reliable.

To reconcile accounts receivable, follow these steps:

  1. Gather all relevant documentation, including customer invoices, receipts, and other supporting records.
  2. Compare the balances in the accounts receivable ledger with the corresponding amounts in the supporting documentation.
  3. Identify any discrepancies or discrepancies and investigate the causes. This may involve contacting customers, reviewing payment records, or addressing any billing or collection issues.
  4. Adjust the accounts receivable balance in the ledger to reflect the accurate and reconciled amount.
  5. Document the reconciliation process and maintain a record of the adjustments made.

Regularly reconciling accounts receivable helps ensure the accuracy of financial statements and provides a clear picture of the company’s financial health.

Is Accounts Receivable a Temporary Account?

No, accounts receivable is not considered a temporary account. Temporary accounts are accounts that are closed at the end of an accounting period to transfer their balances to the owner’s equity or retained earnings. Accounts receivable, on the other hand, is a permanent account that carries forward its balance from one accounting period to another.

While temporary accounts, such as revenue and expense accounts, are closed at the end of the period to determine the net income, accounts receivable remains open and is continuously updated as transactions occur. It reflects the ongoing amounts owed to the company by its customers and is an integral part of the company’s balance sheet.

Why Choose AFHBookkeeping for Accounts Receivable Management?

  1. Experience and Expertise: Our team has extensive experience in accounts receivable management. We understand the complexities involved and employ proven strategies to optimize cash flow and reduce outstanding payments effectively.
  2. Customized Solutions: We recognize that each business has unique needs. We tailor our services to align with your specific requirements, ensuring optimal results and maximum value for your organization.
  3. Professionalism and Integrity: At AFHBookkeeping, we prioritize professionalism and integrity in all our interactions. We handle customer communications and collections with tact and respect, maintaining positive relationships while ensuring timely payments.
  4. Technology Integration: We leverage advanced tools and software to streamline accounts receivable processes, enhancing accuracy and efficiency. By embracing technology, we minimize errors and optimize the management of your accounts receivable.

Contact AFHBookkeeping for Accounts Receivable Services

Ensure efficient management of your accounts receivable, optimize cash flow, and maintain healthy customer relationships with our professional accounts receivable services. Contact AFHBookkeeping today to discuss your needs and schedule a consultation. Our dedicated team will provide the expertise and support you require.

Call us at +1 518-577-3775 or email us at to get started.