Credit is a standard form of payment across industries. Regardless of your products or services, you likely have clients who pay for them with credit. Allowing credit purchases is an excellent way to build your business, but it can lead to lost revenue without organization.
Invoicing is a process used to track accounts receivable (AR) and other debts. When a consumer owes you money, you receive an invoice to signify that debt, and the invoicing process will ensure these debts get paid on time. This ongoing process is essential to tracking your assets, but it requires a detail-oriented financial expert who you may not have on your in-house team.
At Compass East, we help your team manage accounts receivable through our outsourced invoicing services. Trust us as an extension of your high-growth company.
What Is Accounts Receivable?
Accounts receivable is a balance of money due for delivered products or services that customers have not yet paid for. Businesses have AR for services and goods bought with credit, and this income is recognized as an asset on a balance sheet.
AR essentially operates as a company’s line of credit extended to consumers, and there are often terms that require payments within a short period. This time period may be a few days up to a complete fiscal year, and it varies based on the cost of the product or service.
Receivables count as assets because customers are legally obligated to pay the debt. With this debt only extended as far as a fiscal year, it’s also considered a current asset. The invoicing process tracks these assets and assures your company receives payment within the given repayment period.
It’s essential to recognize that AR is different from accounts payable (AP). While AR is an asset to your company, AP represents the debts your business owes to suppliers and other parties.
Why Do Invoicing and Accounts Receivable Matter?
Accounts receivable is essential to a business’s performance. Since AR counts as a current asset, analysts can use it to determine how healthy your company’s cash flow is. When you understand your business’s assets, you can make more informed financial decisions for encouraging growth.
Unpaid debts can lead to cash flow issues, making AR a useful tool for determining your company’s turnover ratio. This ratio measures how many times your business has collected debts within an accounting period. It can help you account for unpaid debts and build them into your allowance for bad debts to prevent overspending.
With invoicing and organized receivables, you can safeguard consumer credit transactions. Credit purchases can help you make more sales and support your success, and you’ll likely have several reliable customers who will consistently pay you back. While AR with invoicing builds trust with your consumers, it also keeps your enterprise in the green.
Outsourced Invoicing Solutions From Compass East
At Compass East, we take a bottom-up approach to your operation’s collections. Within our service structure, our professionals will work with:
- Recordkeeping: Our first step is dedicated to cleaning up your existing accounts receivable for accuracy and clarity. Our team of certified public accountants (CPAs) will assess your balance sheet and examine your processes to find gaps in reporting.
- Credit policy: To maintain an accurate accounts receivable balance, you need a repeatable process for recording your transactions. We can also create policies regarding your consumers and credit to improve your repayment rates. Our team can also develop an effective approach for contacting customers about their debts.
- Technology implementation: With access to an advanced cloud-based technology stack, we can introduce user-friendly software that improves process efficiency.
The Benefits of Outsourced Invoicing Services
Outsourcing your invoicing to Compass East allows your company to thrive. With our invoice processing solutions, you can:
- Save time: If you have an in-house department or designated accountant, managing collections can take time, especially when you have a high customer volume. Rather than trying to juggle collections responsibilities among other company processes, let Compass East take over. Your team will save time so that everyone can work toward larger enterprise goals.
- Reduce costs: Hiring an in-house AR team comes with payroll, benefits, training and equipment. Compass East provides the much-needed process without the additional expenses.
- Improve efficiency: Compass East will implement processes for more effective invoicing within a deadline. More efficient collections allow you to close your books faster and recover more money than you might on your own.
- Introduce technology: Improving the collections process starts with a reliable system. With our cloud-based technology, we can make collections user-friendly and accurate. Our software options also help teams gain valuable insights on collection percentages for cash flow management.
- Optimize your finances: With a greater understanding of your assets, you can make more informed decisions about your revenue and future projects. You can also prepare for unpaid accounts and keep your business in good standing.
Our invoicing services support your business for long-term growth, and it’s only one of the many financial services we provide. With capabilities like cash flow management and financial modeling, we can prepare you for the future.
Work With Financial Experts You Can Count on
When you run a high-growth business, it can be easy to lose track of ongoing accounting processes like accounts receivable. Compass East provides the procedural support you need to maintain accuracy and develop a foundation for development.
We’re more than an everyday financial consulting firm. We optimize your accounting and finances from the bottom up. While we can offer corrections for existing records, we also provide new processes that support efficiency for the long term. With our cloud-based technology stack, your accounting records and processes become more accessible, and our forward-looking approach supports your high-growth initiatives.
At Compass East, our team bridges the gap between finances and accounting to develop powerful insights from historical data. We offer you financial experts with a range of backgrounds, from CPAs to Controllers, and we scale our solutions with your business.