Do Business Well

Poor Accounting Controls

Accounts receivable. The A/R ledger has to be reconciled with the sales journal and the cash receipts journal. If not, it /Ispossible to lose an invoice, have the customer never pay, and never realize it. It’s also a good idea to add up the totals of your numerical invoice file and compare the results with your sales journal.

Accounts payable. Make certain that your A/P ledger agrees with your purchase journal and your disbursement journal. If you don’t do this exercise, you could double-pay an invoice, or lose an invoice and not pay it. The next time you need product from the supplier you will be past due on the account. This may result in your having to pay the old bill (which you weren’t expecting) and pay for the next order COD because you lost your credit standing with this supplier. Continue Reading »

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If they say they will mail it right out, mark the date that you both agree it should reach you on their file. Keep a record of each phone call by time, date, contact person, and details of discussion. Also keep a copy of all correspondence in the file.

B. Responses to wrong answers. Many times you will be told that they did not receive your copy by mail. Immediately send out a copy of the letter and invoice by certified mail, return receipt requested. If the amount is large enough or important enough you may want to use an overnight service. The key is to use a system that requires a signature. This will quickly eliminate this excuse. Follow up again with a phone call on the day you figure the item has arrived to confirm with your contact that they now have the invoice copy. Continue Reading »

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Finish the application with a requirement that the president or majority owner sign and date the document, acknowledging that the above is true to the best of their knowledge under penalty of perjury.

B. Call the references. It is so common for companies to go to the trouble to compile this application and then not make any calls.

When you call, have a prepared form ready to fill in the information that you receive a credit limit. It is a very good idea to send them a letter congratulating them on being granted open account status and informing them of their credit limit. You may want to suggest that if their account is paid promptly, you will be happy to evaluate the situation later for possible increases in the credit line. Continue Reading »

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