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TW Business Solutions

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Bookkeeping  Service Near Nashville, TN

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Other Services that Support your Income & Expenses

Accounts Receivables Management

 

Here are a few reasons why managing accounts receivable is essential:

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  1. Cash Flow Management: Accounts receivable represents money owed to the business, so effectively managing it ensures a steady inflow of cash to cover operational expenses, pay employees, and invest in growth opportunities.

  2. Working Capital Management: A high level of accounts receivable ties up working capital that could otherwise be used for other purposes, such as expanding the business, purchasing inventory, or investing in marketing efforts.

  3. Timely Payment Collection: Monitoring accounts receivable ensures that payments are collected promptly. Delayed payments can strain cash flow and increase the risk of bad debt write-offs if customers default on their payments.

  4. Customer Relationships: Regularly following up on outstanding invoices demonstrates professionalism and reinforces positive relationships with customers. It also provides an opportunity to address any issues or concerns they may have regarding payment.

  5. Identifying Financial Trends: Analyzing accounts receivable data can provide valuable insights into customer payment behaviors, sales trends, and overall financial performance. This information can inform strategic decision-making and help identify areas for improvement.

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To effectively manage accounts receivable, businesses can implement various strategies such as establishing clear payment terms, sending timely and accurate invoices, offering incentives for early payment, conducting regular credit checks on customers, and implementing a systematic follow-up process for overdue payments.

Ultimately, staying vigilant with accounts receivable management ensures that businesses have the necessary funds to operate smoothly and grow sustainably.

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If your business needs a review of your accounts receivables, contact us today for a free 30 minute consultation.  We are here to help!

Accounts Payables Management

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Accounts payable (A/P) management is equally crucial for the financial health and smooth operation of a business. Accounts payable represents the money a business owes to its vendors, suppliers, employees, and contractors for goods and services received.

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Here are several reasons why managing accounts payable is essential:

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  1. Maintaining Vendor Relationships: Timely payment of invoices helps maintain positive relationships with vendors and suppliers. This can lead to favorable terms, discounts, and better service, which can ultimately benefit the business.

  2. Avoiding Late Fees and Penalties: Mismanagement of accounts payable can lead to late payments, resulting in late fees, interest charges, and penalties. These additional costs can eat into profits and hinder cash flow.

  3. Preserving Creditworthiness: Consistently paying bills on time helps maintain the business's creditworthiness. A good credit history can lead to better terms on future loans, credit lines, and purchases.

  4. Preventing Supply Chain Disruptions: Failure to pay vendors promptly can strain relationships and disrupt the supply chain. This can lead to delays in receiving essential goods and services, impacting production schedules and customer satisfaction.

  5. Compliance and Accountability: Proper management of accounts payable ensures compliance with contractual agreements, legal obligations, and regulatory requirements. It also provides transparency and accountability in financial transactions.

  6. Cash Flow Management: Effectively managing accounts payable helps optimize cash flow by ensuring that funds are available to cover necessary expenses without overspending or accruing unnecessary debt.

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To effectively manage accounts payable, businesses can implement several best practices, including:

  • Establishing clear payment policies and procedures.

  • Keeping accurate records of invoices, payments, and outstanding balances.

  • Reviewing and verifying invoices for accuracy and legitimacy.

  • Negotiating favorable payment terms with vendors and suppliers.

  • Utilizing technology and automation to streamline the invoice approval and payment process.

  • Conducting regular audits to identify discrepancies and prevent fraud.

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By prioritizing accounts payable management, businesses can minimize financial risks, maintain positive relationships with stakeholders, and ensure the smooth operation of day-to-day activities.

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If your business needs a review of your accounts payables, contact us today for a free 30 minute consultation.  We are here to help!

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