The accounts receivable (AR) is an important account to maintain for all businesses. Accounts receivable are client accounts that have already received delivery of goods or service but have not yet paid for those deliverables. Whether the account is a payment plan, credit, or recurring charge, does not change the fact that the business will receive income from these clients in the future. Maintaining good faith with these customers can be a full-time job, which is why some companies will hire accounts receivable managers.
What are Accounts Receivable Managers?
Accounts receivable managers are responsible for maintaining the accounts receivable department. The managers are responsible for accurately invoicing the customers for the goods or services they receive. They might also be responsible for running credit checks on customers and establishing appropriate payment terms. While this attempts to guarantee payments are received on time, there is still a margin of error present, and there is always the possibility of financial disruption. When payments are not being received on time, or the AR manager is in over his or her head, they might need to contact an outside financial company about Factoring.
What is Factoring?
Factoring is shorthand for accounts receivable financing. When a company factors with a financial institution, that institution purchases unpaid debts from the client’s accounts receivable. The business owner receives the capital with a small percentage taken from the financial institution, similar to how a credit card transaction works. The business then relinquishes responsibility for collecting on those accounts, which are now owned by the factoring company.
Where the Two Meet
Accounts receivable managers are great tools for your company to maintain their incoming finances. They also act as quality control and customer service because they are the face of the transaction. However, if the company hits a rough patch or if there are a large group of clients who are unable to pay for their services, you should consider factoring. Factoring can ease the strain that the manager holds as well as increases the capital that the company has on hand at that moment. Many companies outsource their payroll and IT requirements, but might not know that outsourcing AR management is a possibility as well.
For over a quarter of a century, AmeriFactors has acted as the accounts receivable management company for businesses of all sizes. AmeriFactors provides the best factoring service in the country and take immense pride in our service and customer relations. If you are interested in factoring or would like to know more, give us a call at (800) 884-3863!