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All About Accounts Receivable Management Service

Updated on :  

08 min read.

Every company, irrespective of size, necessitates steady cash flow for survival. Late payments and unpaid invoices affect cash flow and hinder the company’s smooth operation. This is why accounts receivable management services are imperative for the functioning of all companies.

What is Accounts Receivable Management Service? 

The outstanding invoices or the money that a company has yet to receive from its customers are accounted for as accounts receivable. Sometimes, customers do not obey the company’s payment terms and delay their invoice payments. This requires the company’s accounting team to spend additional time and effort following up with the customers. Companies often opt to outsource their accounts receivable management process to eliminate the extra hassle.

Accounts receivable management services refer to third parties that monitor and control a company’s complete accounts receivable and debt collection process. Following are the two major types of accounts receivable management services:

  • Skip-tracing – Skip-tracing is helpful when the relations between companies and customers break down, the line of communication becomes defunct, and finding the customer for the payment of invoices becomes difficult. It enables companies to track down the customers and collect unpaid invoices.
  • Third-party management – It refers to the typical accounts receivable management service in which companies hire third-party vendors for collecting debts and controlling the accounts receivable process. Third-party management service is also referred to as the debt collection process.

Companies’ accounts receivable management services must comply with industry standards such as ISO 9001 for quality management. 

Why are Accounts Receivable Management Services Necessary?

An efficient in-house or third-party accounts receivable management service can offer a range of benefits. Some of the major benefits are:

  • Steady cash flow – An accounts receivable management service helps companies avoid cash flow-related issues by providing beneficial insights about where their cash is stuck and managing a record of every sales transaction. It ensures that companies do not provide credit benefits beyond their credit limit and have adequate cash for their daily transactions.
  • Reduced losses resulting from bad debts – Hindered cash flow leads to a lack of funds for daily transactions meaning bad debts and subsequent losses. An accounts receivable management service helps companies regularly follow up with debtors and ensure ideal cash flow levels by monitoring payment schedules.
  • Enhanced customer experience and sales volume – Receivable management monitors customers and their payment performances. This helps businesses maintain a transparent relationship with customers and provide discounts and offers to ensure a steady payment record.

Choose ClearOne for Your Receivable Management Service

ClearOne uses modern and updated technology to help businesses manage their accounts receivable. It aids companies in recording and settling numerous invoices. Companies can send payment reminders to customers and monitor receivables at either the invoice or customer levels. ClearOne saves business time and cost and helps them stay on top by enabling them to mark receivables as paid instantly.