Also known as Cash Receivables, the Accounts Receivable is money owed to a business from its clients. The Accounts Receivable account is shown on your Balance Sheet as an Asset.
In this video…
Hi, Greg here for On Track Business Management. In this video, we’ll be talking about your accounts receivable report.
Accounts receivable is money owed to your business by your clients or customers, and shown on your balance sheet as an asset. Managing your accounts receivable is key to the livelihood of your business. The most important thing I can say here is, bill early, bill often. It’s so easy to fall into the trap of being too busy working and getting the project done to bill in a timely manner.
When writing your contract, pay special attention to the terms. How often do you get to bill? How long after billing do you get paid? In most cases, it’s best to bill right after processing payroll.
There are several invoice formats used in construction: progress billing, usually percent complete by line item; time and materials, and cost plus a fixed fee; or unitary by the unit built or installed, draws at a specific point of construction, as well. You’ll find sample invoices available in the resources section on the On Track website.
Now that we’ve built our jobs, we can manage our receivables by reviewing our accounts receivable list often. There are many formats of accounts receivable, such as the aging report. This will show past-due receivables. Remember, the older the receivables get, the less likely we are to collect them.
In the next video, we’ll talk about accounts payable.
Next Video: Accounts Payable