Accounts Receivable Flow Chart

Whether you’re a two-person operation or a multi-national conglomerate, tracking and understanding your finances can be the difference between failure or success. For an efficiently run business, there should be a constant flow of money, in and out of the company, that keeps your organization running smoothly. But that can only happen with a properly managed accounts receivable process.

Accounts Receivable Cycle

Accounts receivable (AR) is a balance of the money for goods and services that have been provided by a company but not yet paid by its customers. Any outstanding invoice is considered an accounts receivable. These assets are recorded on a balance sheet to ensure you collect payments on time for each service provided.

An accounts receivable flow chart is the process by which your financial department sends invoices and collects money on a cycle.

Key Takeaways

Flow charts begin with an interaction between your company and your client that results in a sale of goods or services.
Send an invoice to your client for services received.
Collect payment within the allotted time period; 30 days is traditional.
If payment is received in full, log payment and close the account. If payment is not received, continue to send the invoice every 30 days.
The transaction is reconciled once payment is received or written off.

Conducted manually or with accounts receivable automation, the process will always start with an invoice sent to a client for the sale of services or goods. Since every business is different, you’ll want to develop your own account management process flow chart process to handle incoming payments.

Using this information is a good place to start:

Understanding the Flow Chart Process

Understanding what AR is, and what an accounts receivable flow chart consists of is very different from managing the process. Establishing effective guidelines for your entire department to follow with every client for every transaction will ensure your finances remain organized and payments are collected on time.

Improve the AR Process Through Accounts Receivable Automation

The more complex your business and clientele, the more complex your AR collection process flow chart will become. This isn’t a bad thing, but a needed step to remain organized and ensure your cash flow continues to cycle through your company successfully.

To fully streamline your process and improve the collection experience for both your employees and your clients, rely on automation software to save your company time and money.

Automation software can:

Eliminate human error: Processing AR manually can reduce efficiency through human error.
Produce accurate data: Automation software will produce an alert for any errors that are found. Having a flow chart that carefully reviews accounts, invoices, payments, and outstanding debt will keep your finances organized.
Reduce time spent on AR collections: Outdated or overly complicated manual processes of sending invoices and taking payments can take more time than your company can devote to the process.
Simplify payment process: Ensure fewer obstacles in your client’s way to paying your invoice with AR automation processes.

Learn how Gaviti can streamline your AR collection procedure.