Accounts receivable management refers to the process of overseeing and controlling the outstanding balances owed to a company by its customers for goods or services provided on credit. It involves various activities aimed at ensuring timely collection of receivables while maintaining good customer relationships. Key aspects of accounts receivable management include:

  1. Invoicing: Issuing accurate and timely invoices to customers for goods/services rendered.
  2. Credit Policies: Establishing and enforcing credit terms and policies to minimize the risk of late payments or bad debts.
  3. Payment Terms: Negotiating and setting clear payment terms with customers, such as due dates and acceptable methods of payment.
  4. Collections: Actively following up with customers on overdue payments through reminders, statements, and possibly more assertive collection actions if necessary.
  5. Aging Analysis: Monitoring and analyzing accounts receivable aging to identify delinquent accounts and take appropriate actions.
  6. Cash Flow Management: Managing cash flow by optimizing the timing of receivables collection to ensure sufficient liquidity for operations.
  7. Customer Relations: Balancing the need for prompt payments with maintaining positive relationships with customers.

Effective accounts receivable management helps businesses maintain healthy cash flow, reduce bad debts, and improve overall financial performance.