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Risk Assessment in Accounts Receivables



Your business health matters and two critical components that determine your business’ health are your customers and the cash flow. Your business gets prone to a big risk if any of these components lose their track. A comprehensive assessment of your accounts receivables is required from time to time in order to maintain a good financial health and long term business relationships, say accounts receivable outsourcing firms. 

Let’s take a look at some of the major areas or components you need to pay attention to for risk assessment. 

1. Conduct customers’ creditworthiness and financial standing

It is extremely important to assess your customers’ financial health from time to time. It goes without saying that this is pretty much part of a customer’s on-boarding process. A comprehensive assessment helps you see any potential financial risks your customers might be facing beforehand. It also helps you make necessary negotiations which are suitable for both the parties. 

2. Aging receivables report

According to the top accounts payable outsourcing companies, you got to monitor how your credit and collections departments are functioning. You need to track late invoices and find out the reasons behind late payments. Maintaining a contact with your customers is extremely important. Besides, clearly documented paperwork wouldn’t go amiss. You must watch out for early signs that show your customers are facing any financial stress or not. 

3. Costs to your business 

As a far-sighted business you need to pay attention to the soft costs to your business as well. These may include on boarding and training employees, legal fees, price of the new software etc. identifying and assessing hidden costs is extremely important for the health of your business, say companies offering online accounting services in India. 

4. Good understanding of your customers’ industry 

Gaining a good understanding of your customers’ industry helps you shape your credit to cash process. For instance, if they are into manufacturing, how their production and inventory cycle works? What are the prime compliance and regulatory considerations they have to bear in mind and how these regulations affect their finances? These are just few of the pointers you got to keep in mind while acquiring a good understanding of your customer’s business, say agencies offering offshore accounting services in India. 

5. Skills of your collections department 

Your cash flow must be steady whilst keeping your customers happy. Your team needs to be crystal clear about the process. They also need to be decisive; however, there are certain skills they need to have. It is your responsibility as a business to train them from time to time. 

Hope you found the post useful. For more information about accounts receivable outsourcing firms, feel free to get in touch with us.

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