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Cash flow as a critical element in determining the


Availability of cash is essential towards the company since it contributes to the long-term success of the organization. Improper guidelines and procedures in the management of accounts receivables lead to shortages in cash flows and consequently ultimately causing the inefficiency of the firm. This part summarizes the many control steps of the accounts receivables and various types of sale deals. It also identifies the Accounts Receivable turnover, and eventually the shows the methods followed in receiving of payments.

Happen to be credit checks performed before conditions are naturally to clients? Describe the procedure

Business owner/Manager’s: Answer

The company needs to perform a credit score cheking to its customers prior to granting these terms of business. The credit check involves the id of the customer’s personal information, deciding the credit history of the client and the scrutiny of the client’s public records.

Business owner/Manager’s solution converted to book language

The organization need to perform a credit check needed to their client prior to granting associated with the individual terms of business. It will help the company identify the appropriateness of their clients. The credit rating checking method entails figuring out further information about the customer and determining the client’ credit history. The company then examines the past public records with the client.


Looking for further information will help the company acquire an in-depth knowledge about the customer. The overview of the patient’s credit history and public records help the business in defining the financial records of the client and thus determining his/her eligibility.

What type of sales agreements are you experiencing in place, which is signed prior to the sales occur?

Business owner/Manager’s Answer

To guarantee the efficiency with the company businesses, there is a need for the re-homing of relevant conditions and terms within regards to business transactions. Consequently , the product sales agreements that must be signed before sales occur include, the hybrid agreement, redemption arrangement, and the cross-purchase agreement.

Organization owner/Manager’s answer converted to textbook language

The organization ordinarily have to sign three several types of sales contracts before performing any business transaction. The several types of sale negotiating include, the hybrid contract, redemption arrangement, and the cross-purchase agreement.


The cross order agreement allows partners with the company choose the shares with the exiting or perhaps deceased owner at a specific price, while the payoff agreement permits the company to get shares with the exiting owner. The cross types agreement lets both the firm and the co-owners buy the stocks and shares of the getting out or dearly departed owner.

Are these the best Accounts Receivable turnover?

Organization owner/Manager’s Response

Accounts receivable proceeds is the ratio between the total amount of the company’s funds inflow and the average accounts receivables in that particular 12 months. These rate facilitates the evaluation of the ability of the business to effectively issue credit rating sales to its customers and to manage to collect payments from them immediately.

Business owner/Manager’s answer transformed into textbook language

Accounts receivable yield is the percentage of the funds inflows with the company resistant to the average accounts receivable within a given time period. These rate is vital within a business activity since it can be useful for the evaluation of the efficiency and productivity of the firm.


The ratio of accounts receivable can be calculated by dividing their net value of credit sales plus the average accounts receivable for the given period. On the other hand, computation of the common accounts receivables is done by having total amount of cash inflow at the beginning and the end of a offered financial season and separating the quantity by two.

What is the procedure to receive repayments from consumers including the getting of email, opening the e-mail, recording the transactions, and making debris into the traditional bank?

Business owner/Manager’s Answer

On getting the payment, the accountant data the deal on the sales receipts for the company’s mailroom. All the obligations are then simply forwarded to a secure organization’s mail pouch after which comparison is made involving the total around the deposit slip and the volume indicated within the mailroom examine receipts, the essential adjustment is made if any, before deposit into the financial institution.

Business owner/Manager’s answer transformed into textbook dialect

Upon receiving the obligations mail delivery, the scrivener records each of the payments received on the product sales check receipts list for the organizations mailroom. After guaranteeing accurately documenting the transaction, the recorded payments happen to be forwarded to a secure inter-office mail sack of the company. Scrutiny of the record is performed to determine virtually any discrepancies after which deposits towards the bank is manufactured.


The process of getting cash and recording the transaction effectively is very regimented. This is resulting from the multiple processing investigations meant to secure the ethics of the method. Therefore , the business needs to set more focus on various control checks to facilitate the efficiency with the process.

Describe the procedure the company follows once receiving obligations from consumers. What documents are validated to ensure obligations match the invoice provided for customers?

Business owner/Manager’s Response

Getting of payments from customers is a procedure which involves acceptance of the ask for payment through the supplier and approving the invoice manually. The suitability of the payments is then established, information in the invoice created the accounts payable quests, review of invoice information carried out and final approval of invoice carried out online.

Organization owner/Manager’s answer converted to book language

The company needs to first get an invoice from a supplier and to approve the payment personally. The company then examines the eligibility from the payments to ascertain if the distributor is for the supplier list after which report on the bill information is performed. If the invoices match with you can actually purchase order, on the net approval of the invoice is completed.


Before repayments of good and services is manufactured, the company confirms some of the papers to ensure whether they match with the invoice sent to the provider. The paperwork include, the purchase order and the sales buy.

Is there an aging process for a lot of Accounts Receivables accounts to higher control receipts from clients and to gather from past due accounts?

Business owner/Manager’s Answer

Suitable accounts receivable accounts methods can better the control receipts from customers. For example, regular auditing of the of money receipts, segregation of tasks, and the limit access to the company’s billing software helps the organization minimize problems related to accounts receivables, and therefore control the receipts.

Organization owner/Manager’s answer converted to textbook language

Controls in the company’s accounts receivable can be done through the relevant creation of customer bill to help minimize the accounts receivable related issues. The control processes include the confirmation of contractual terms in the matter of the uncommon payments conditions, proofreading of invoices plus the constant overview of the companys accounts receivable journal entries.


Accounts receivables is a essential tool to get the company because it helps in the evaluation of the ability as well as the efficiency in the business. Consequently, businesses need to implement appropriate controls and policies to assist minimize problems related to the creation from the accounts receivables.

How can a business manage it is Accounts Receivable

Business owner/Manager’s Answer

Adoption of the electronic invoicing process and sending of bills by means of email will make sure the files reach customers immediately. Additionally , the lowering of repayment terms, dotacion of multiple payment strategies and the maintenance of a healthy romance with the clientele is valid with regards to the managing of the accounts receivables.

Organization owner/Manager’s solution converted to textbook language

A company may efficiently take care of its accounts receivables simply by implementing ideal policies and principles this sort of adoption of recent technology in invoicing and sending billing via email to accelerate the delivery time. Seeking guidance coming from an accounting company, the offering of multiple payment methods and reducing the terms of payment will lead to the subsequent of the accounts receivables.


Management of cash circulation is a critical aspect of a business as it enhances the long-term your survival of the organization. Cash flow disadvantages within the organization as a result of improper management with the businesss accounts receivable. Consequently , companies need to adopt ideal strategies to make sure proper managing of the cash flows.

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Category: Business,

Topic: Accounts receivable, Business owner,

Words: 1457

Published: 12.24.19

Views: 271