Learning to manage accounts receivable effectively is an important goal for any business owner or those who work in accounts receivable. It can be beneficial to take an accounting course that will teach about accounts receivable. Why are accounts receivable so important? The collection of the amounts due to a business is critical to success. Sales might be high and the company might have lots of satisfied customers, but if the customers don’t pay, or don’t pay on time, the company could have a significant cash flow problem and find itself unable to pay its bills. It is not only important to collect the payments but also to record them properly. For example, if a company has retail sales and is required to collect sales tax, the taxes collected must be recorded to the correct account. They are not income to the company but are funds the company has collected on behalf of the state or local taxing agency.
In a typical company the work in accounts receivable starts with the sale. When the good or service is sold, a bill is created for the customer. In larger companies these bills or invoices automatically generate an entry to the accounts receivable for each customer. In small businesses the invoices might need to be recorded manually in accounting software. Once the invoice is recorded collections efforts can start if they are needed. Usually this involves calling customers who are past due to try to get them to pay the invoice or invoices.
Sometimes the person who is calling to collect the bill becomes a contact person for solving customer problems. For example, the customer might have a concern about the quality of the items purchased, the timing of delivery, or billing errors. When one of these things happens, the accounts receivable representative might have to contact people in the sales, manufacturing, or logistics areas of the company to solve the problem.
Although it might seem that customers paying a month late or even a few days late isn’t too important, in larger companies the cash received can be invested in short-term treasuries in order to bring in additional cash. Late payments to smaller companies can negatively affect operations, if the company is unable to pay for raw materials or inventory when needed.
In some larger companies the accounts receivable department might also be responsible for evaluating requests for credit. Evaluating credit for businesses can be complicated. It might be necessary to check references with other companies that supply that business or to check with banks to try to determine whether the company is likely to pay for the goods and services it purchases.
An accounting course that covers accounts receivable can be helpful to anyone who has responsibilities in this area. This includes not only accounts receivable specialists in larger companies, but also managers and business owners. Some accounts receivable accounting courses are specific for various types of software that companies might be using. Usually these classes cover in detail the software module that is used for accounts receivable. There are also stand-alone online courses about accounts receivable, many of which are free.
Any bookkeeping course will cover accounts receivable. These classes can be found online or at technical colleges. The principles of accounting course in any college or university will also include in-depth detail on accounts receivable. When choosing an accounts receivable accounting course, try to find one that discusses more than just the mechanics of recording the entries. Topics beyond such mechanics include the effect of collections on cash flow and also how to manage collections in ways that increase customer satisfaction.