When talking about having a good Accounts Management System, my primary aim is to encourage businesses to ensure they protect their cash flow while still give their customers quality service through processes and systems. These systems need to support your cash flow and verify that your customer can pay.
A good accounts management system is a crucial element of the broader systems for running your business.
Most business break down the systems into three areas;
- Sales and marketing
Many people believe, what their accountant does, is the finance element. I am here to tell you, this is a big mistake, while your accountant is very important, their role is to bring everything together for compliance purposes. Your finance system is, everything that needs to happen so your accountant has the correct data to work with.
Your role as a business owner or manager is to make sure the systems are in place for your team and customers. Everyone needs to have a full understanding of how it works. The systems are to keep your customers paying on time and the cash flowing into your bank accounts. However, more importantly, you must make sure your customers have the ability to pay you before any work is carried out.
It is important you have customised Terms of Trade. These are the rules of your business, and they should reflect how you want your business interactions with customers to be. These are the main elements that trip many businesses up, especially when a customer is not happy and refuses to pay.
Your system needs to have an easy way to keep the cash flowing; this is a task that must be carried out on a regular basis. It would be wise to make sure you have trained staff to carry out this job and in my 7 Lesson in Accounts Management; lesson 1 is the debt collection process; you can access this for free on this link. Following up on outstanding accounts is the only way to keep the cash flowing.
By the way, your bank account balance is not cash flow, Your debtor’s ledger measures your cash flow. You should concentrate on keeping it at 45 to 60 days at the latest.
Do you have a Bookkeeper?
Do you have business document templates?
Do you have all the necessary documents required to support your business activities? By this, I mean forms, letters, quote sheets, etc. These are the core policy documents for a good accounts management system; these documents should be customised with your logo and information to suit your business. They should be in a ready to access place, so when you need to send a client a document you just need insert their name and address.