Financial management

Tips to Improve Your Accounts Receivable Turnover Ratio

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Financial management

5 Tips to Improve Your Accounts Receivable Turnover Ratio

1. Invoice regularly and accurately. If invoices don’t go out on time, money will not come in on time.

2. Always state payment terms. You can’t enforce policies that you haven’t communicated to clients. If you make changes, call them out.

3. Offer multiple ways to pay. New B2B options are coming online. Have you considered a payment gateway?(opens in a new tab)

4. Set follow-up reminders. Don’t wait until customers are in arrears to start collection procedures. Be proactive, but not annoying, with reminders.

5. Consider offering discounts for cash and prepayments. Cash(less) is king in retail, and you can reduce AR costs by encouraging customers to pay ahead rather than on your normal customer credit terms.

Learn more about maximizing your AR turnover ratios.

Finally, managing financial controls involves analyzing how the company is performing financially compared with its plans and budgets. Methods for doing this include financial ratio analysis, in which the financial manager compares line items on the company’s financial statements.

What are the Three Types of Financial Management?

The functions above can be grouped into three broader types of financial management:
Capital budgeting, which relates to identifying what needs to happen financially for the company to achieve its short- and long-term goals. Where should capital funds be expended to support growth?

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