What is AR Process - A Step-by-Step Guide

 

In a business’s general ledger, the accounts receivable (AR) balance is the amount the company has given on credit to its customers. It is an asset to the business, hence maintaining the AR balance is very essential. It constitutes all the aspects of crediting, from the point when a customer applies for credit to the stage where the amount is supposed to be returned to the creditor. Certain important steps need to be followed religiously at any company so that maintaining the account receivables becomes easier. This can either be done by AR outsourcing to an external agency or keeping a track of all receivables yourself. The various steps that you can follow to manage the AR at your company are:

Establishing definite credit practices

A much-needed factor in the accounts receivables process is to maintain a credit check system. This means going through the credit history of your customers and offering credit only to those who are more likely to pay your amount back. This method can also help you determine the credit amount that can be given, the payment period which can be offered, or any discounts that could be valid for the customer. Some factors to consider in this step while checking up on a customer is their history with your business, their payment history, your competition in the credit market, and your company’s cash flow.

Sending customer invoices

Setting up an accurate and convenient format for invoices is necessary for your company and customers. Any communication, including the invoices, can be sent in various media formats at the customers’ convenience. You can even send templates so all the needed information is taken directly without any delay and the terms of payment are specified clearly in the document. Your customers should also have easy access to all invoices and other such information whenever they need it. If you need to follow the process of debt recovery later in the future, these invoices would also help keep track of all communication. Hence, your company should keep a track of all the information sent and received.

Accounting for AR

Your company’s financial statements will reflect your accounts receivables, so make sure to account for all invoices sent, such as the products or services offered to the customer, the debt owed for it, and the date on which the amount needs to be paid. Accounting can be carried out in two major methods, on accrual-basis and cash-basis. In the accrual-basis accounting, when a product is sold, it is considered as the revenue. However, in cash-based accounting, it is revenue only when the company receives the amount for the service or product.

There are various advantages to following a smooth and stable accounts receivables process. You can offer credit to trustworthy clients, build brand loyalty, and increase your sales. If things don’t go well and you do not get the account receivables from your customers, you can acquire the services of a 3rd party debt collection agency that can help get the amount back. So make sure to follow a well-planned format for accounts receivables for the benefit of your customers and your business.

Looking for the most profitable and suitable proposals from your lenders? Hire our expert debt collectors today!

3 Major Reasons to Maintain a Good Credit Score

Any financial plan should consist of features that will help you maintain a good position in the credit reports India, while also making beneficial investments and financial choices. Making sure you have a good credit score can be a difficult task, especially if you have many debts. Managing a bad debt can be even worse as you might have to look for a settlement with the debt collection services hired by your creditor. However, making sure your credit score is high has several benefits, such as:

Better loan and credit terms and options

Many people are on the receiving end of a debt collection agency as they struggle to pay back dues they had taken as credit. However, if you have a good credit score, you can choose from a range of choices for loans, credit cards, and other credit products. This can help you compare rates and choose the most beneficial one depending on your requirement. The terms and conditions that get applied to such credits are also more lenient as compared to those offered to people with low credit scores.

Higher insurance rates

You can save a lot of money on your auto or home insurance if you have a good credit score, as the risk is lesser for the insurance company. Hence, many companies lower premiums for people with a better score. You can choose which insurance company to opt for by looking up the business information reports and finding trustworthy ones.

Increased housing choices

Maintaining a good credit score by paying off your debts and dues on time shows that you are financially responsible. On the other hand, being a victim of debt recovery services can be an unpleasant experience. In these cases, the creditor has no other choice but to opt for services related to bad debt collection. This is because an economically stable person receives various options for houses to rent or purchase as landlords or owners usually check a person’s credit score before offering them the house.

Looking for the most profitable and suitable proposals from your lenders? Hire our expert debt collectors today! 

Understanding the Process of Debt Collection

The process of debt collection has come a long way in the past decade, as compared to before when there were no laws guiding it. With the increase in creditors and debtors, some set methods and guidelines have been established, which benefit both parties. These new aspects make it easier for the debt collection agency to recover money from delinquent accounts, while also protecting the rights of the debtor. 

The major aspects of debt collection service India that you should be familiar with include: 

Dedicated account managers 

Most collection agencies employ trained professionals to recover debt from delinquent accounts. While doing so, they make one person responsible for the recovery from each account. When recovering money, it is more convenient to have one person assigned to the case, instead of a few separate people working on it. 

Multiple recovery methods 

Debt collection agencies offer various ways so a person can clear their debts with the creditor. A settlement can be worked out by an agent or legal steps can be taken, depending on the situation.

Consistent communication 

Credit report services India works on set guidelines regarding which methods can be used to contact the debtor. The collection agency can get in touch with the debtor via calls, messages, fax, email, or personal visits to the debtor's given address. Regardless of the method used, the agent assigned to the case will make sure they are in contact with the debtor during the recovery process. 

Looking for the most profitable and suitable proposals from your lenders? Hire our expert debt collectors today!

3 Services Offered by Debt Collection Agencies

Companies provide credit to people for various reasons, however, getting this amount back from the debtor can be tiresome. Usually, such companies outsource this collection of delinquent debt to a debt collection agency, which consists of trained professionals who can get the money returned to the creditor.

You can expect a few debt collection services when you approach a collection agency. Some of these include:

Credit control

If a creditor finds a debtor that hasn't cleared their debt for a long time, the task to recover this amount is usually given to a debt collection agency. This way, the creditor does not need to spend time, money, or resources to get the overdue amount back from the debtor.

Pre-legal actions

During the process of debt recovery, several issues about the debtor might come forward. For example, the debtor's address could have changed, in such case, the agency would have to trace them. The agents trying to recover the debt also need to follow legal methods and maintain professionalism while trying to do so, like conversing professionally while contacting the debtor via call, text, email, or fax. The collection might also have to send in agents to the debtor's address to collect the amount or offer alternatives so the debt can be recovered. If there is no response, official reminders and warning letters are also sent to the debtor.

Legal actions

When the pre-legal services carried out by the debt collection agency does not work out, the agency, along with the creditor, moves towards taking legal action against the debtor. This matter is then taken to court. Credit Reports India will not contain a good perspective of the debtor if the case goes to court.

Looking for the most profitable and suitable proposals from your lenders? Hire our expert debt collectors today!

What to Know Before Working with Debt Collection Agency

Since you delayed your MasterCard payment a couple of months ago. You receive many annoying phone calls from borrowers. However, you would like to find out some facts about the debt collection agency. Although many companies are working in the same field, not all collection agencies operate lawfully or under license to supply their debt collection services.

What is a debt collection agency?

A debt collection agency is a company that receives debts from businesses. Most collection agencies run their businesses as creditors’ agents. they assist creditors collect the debt allocated for an amount of the entire loan amount collected as their fees.

Some agencies also are referred to as “loan buyers”. They take loans from creditors and search for the exact amount of debt owed.

Typically, after many months of chasing without the success of debtors, creditors will allocate or sell the debt to collection agencies in a way that the quantity of this debt are often written off thanks to a loss in their records.

Things about debt collection services that you simply got to know

Those who are chased by debt recovery agencies know that they're aggressive and have a nasty reputation for intimidating and harassing debtors. Fortunately, in many nations, collection agencies are monitored by law to stop some unpleasant practices. because they are aggressive in nature, there are some activities that borrowers should remember when working with debt collection agencies.

>> Avoid lecture debt recovery agencies: The less you ask them the better. If they call you at your home, at work, or on a telephone , simply ask them to speak with you by mail, and send them a ceasefire with the mail registered with the receipt.

>> Even after you send them a mail and they still keep calling you, you should opt to tap the phone conversation. Check your state’s law to ascertain if your conversation is allowed to be recorded. Usually, once you tell a debt collector that a conversation is going to be recorded, it's likely that the phone will hang up.

>> Be conversant in the law of limitations in your state. The debt collector will keep calling you for an extended amount of time, the debt is additionally over and therefore the loan not must be repaid legally.

>> If you create any unknown payment to the debt collector, you merely confirm the loan and resume the law of limitations. Therefore, it's vital that you simply are conscious of your rights.

>> apart from the law of limitations, you should opt to learn your rights by reading the Fair Debt Collection Practice Act (FDCPA).

>> Ask the collector to prove that you simply are the author of the debt. If they fail to prove it, they’ve got no right to ask for a loan from you.

>> simply because you're in debt doesn't mean you opt to be threatened. remember the debt collection agency and be educated about your right to affect them.

Final thoughts

The debt collection agency may be a necessity in our current business scenario. While companies have always needed a set agency with increasing amounts of economic loans, debt collection agencies are even more needed. Collection agencies are called by companies that aren't ready to receive payment from the business for his or her invoices. Business loans can grow rapidly with interest charges and sometimes troubled companies will simply stop paying and suddenly find themselves unable to pay fully. When this happens, debt recovery agencies can advance.

Significance of getting Business Information Report

Many businesses require constant reporting and oversight, because the board may require daily, weekly, monthly, or yearly reports on the way to run the business. For all kinds of businesses, from e-commerce to the industry , a business information report can save time, money and also improve your processes within the end of the day .

1. Management Insights

Business information report collects tons of knowledge around your company which will provide useful information for management. Insights around costs, growth and profits are going to be included, which may won't help in creating future forecasts, marketing plans and budgets.

Management will use development reports and business reports to spot company progress, trends and any discrepancies which will have to be investigated. For instance, having complete and reliable data about your business means it is often consulted and shown regularly.

2. Identify problems

Routine monitoring and reporting can help expose any problems before you've got an opportunity to move your business forward. If it's just an annual credit report that your company makes, problems and inconsistencies can easily be lost and reduce your time and business without your knowledge.

Observing the matter area and comparing the info collected over time will help indicate if there are any problems where they started. It can then won't provide improvements or with methods for improvement.

3. Published opportunities

Business info reports over time can identify any opportunity to expand, alongside problems within the business. The report is an honest way to record past activity and time when the extension proved successful. It often won’t help determine future growth opportunities, to spot what has worked well and what else are often wiped out the longer term . Monitoring and reviewing competitors on a daily basis also can help.

4. Transparency

The yearly report recognizes many public companies that provide financial data and ownership info about the business to stockholders, the government. More regular reporting provides additional transparency throughout the year, potentially making the business more attractive to potential investors. This enables businesses within the same field to be easily compared and their performance measured against one another .

5. Set a goal

Reporting on business performance makes sure that performance comparisons are often remodeled during different periods. Reporting objectives must be according to the KPI, as they indicate whether or not they met, exceeded or not. Regardless of the outcome, it is often not able to identify performance trends and determine future goals where the corporate is. This might be about making general budget decisions to shape future growth strategies.

6. Supervise the spouse

Along with your own business, it's also important to watch and measure the performance of other business partners you trust to form effective use of cash and time. For e-commerce and online retailers, using parcel tracking services may be a common space, providing transparency and accountability for patrons . However, postal tracking also can be useful for the business to assess and review the effectiveness of their delivery partners.

Final thoughts

Start with Debt Nirvana, as we provide a variety of reporting, whether you would like to supply customers more options or streamline your own processes. The recorded data of business information report services are often included in any report and supply how for your business to perform better.

10 Ways for Hiring a Debt collection Agency

 Every company, small, medium, or large, whether in the financial sector, always keeps ‘income received by customers’ in the form of receivables. If you look at the annual accounting statement, there may be a ‘bad date’ or a balance indicator column. Some of this amount can be recovered, some not at all or through lengthy legal processes, which can last for many years. International accounting firm PricewaterhouseCoopers (PWC) estimates that external collection agencies collected $30 billion a year in debt in the mid-2000s. This is a strong sum!

In such cases, the debt collection agency can either deal with the receipt through an internal mechanism or outsource the collection of such debts to external collection agencies. These agencies are third-party business collection agencies contracted by the company to use the skills and resources to recover debts. Such an agency is called a debt collection agency. These agencies are governed by the rules of the Fair Trade Debt Collection Practices Act and therefore have the knowledge and skills related to debt and debt collection.

There are several benefits to using a Debt Collection Agency, including:

1. No delays in debt collections
The internal accounting department of a company is usually responsible for collecting the amount due to the company. However, ‘old age’ in the form of a long-term loan requires time, skills, and dedicated efforts that require intensive training. Delays can cost the company dearly, therefore, a third-party service or professional collection agency is well placed to handle this task exclusively and is therefore able to recover the money that would not otherwise be exhausted.

2. Increase productivity
Sales teams in companies that are owned by customers are not paid commissions or incentives if they owe money to customers. This forces people to spend a lot of time working to recover money instead of making actual sales calls for future income or generating sales. This greatly affects the revenue of the business.

3. Gaining customer loyalty
Achieving new customers is a costly task but retaining existing customers is an important factor in the success and longevity of every business. Playing the role of ‘bad cop’ in recovering debt from existing customers is not a task that most companies are waiting for to adversely affect. By using debt collection services to send notices for debt recovery, the action is usually taken without affecting the money or the person’s relationship with the company.

4. Written policies
In business-to-business circles, there is a written policy to write off bill payments as long as possible to allow for better cash flow. In some cases, a check or outstanding balance is not issued against the invoice unless the collection agency intervenes in the payment.

5. Flexible costs
By paying a fixed salary to a debt collection agency or agent to recover a debt, regardless of how much is owed, companies save a lot of money that is used to pay for salaries and overtime and recover debts effectively. But the effort was spent training them. Most companies pay debt collection agencies only when they collect money.

6. Easy to settle the unpaid account
It can be argued that an internal debt control department such as a debt collection agency provides the same service. However, a debt collection agency can always provide good results as it is more cost-effective. The impact of a debt collection agency involvement should not be underestimated. Often, a simple demand for payment from a third party agency may be that the debtor needs to settle into an unpaid account.

7. Additional services
Debt collection agencies can also provide additional services for the core business of debt collection. For example, a collection agency may provide legal services, investigative agents, process servicing, company search, credit reports, and company formats in addition to debt collection services. So the agency providing all these services can be a “one stop shop” for all your credit control needs.

8. Internal legal department
The debt collection agency may also have an internal legal department that appoints lawyers and legal clerks. Such companies provide the right option to the lawyer and the traditional option of employing a fraction of the cost. A debt collection agency with an in-house legal department often provides much more professional service than a lawyer’s firm, which may not be an expert in the field of debt collection.

9. Qualified debt collection agents
Debt collection agents are often less than the desired image. However, much has been done in recent years to regulate industries to ensure that reasonable professional and ethical service is provided at a reasonable price. Ensure that any debt collection agency you are involved in is regulated by the relevant governing body and provides proper licensing and accreditation.

10. Concise fee structure
When considering a debt collection agency, make sure you understand the structure of fees and pricing. Avoid any collection agency that needs further payment or you need to buy credit or join any type of membership plan. A reputable collection agency will have a clear and concise fee structure which will normally be a set commission on any recovered monastery.

Final thoughts

In particular, for financial sector companies such as banks, for existing and new customers, expanding the line of credit depends heavily on keeping the ‘aging minimum’ to a minimum. Only by promoting growth can banks succeed in achieving their target deposits and income. Therefore, by hiring a professional debt collection agency, the bank can expect a speedy recovery, maintain customer relationships and credit as well as ensure their financial books are in good health.