Accounting101: Learn Accounts Receivable From A to Z | Chris Benjamin | Skillshare

Accounting101: Learn Accounts Receivable From A to Z

Chris Benjamin, Instructor, MBA and CFO

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9 Lessons (38m)
    • 1. Course Introduction

      1:02
    • 2. Instructor Introduction

      0:55
    • 3. Accounts Receivable Cycle

      5:33
    • 4. Best Practices Part 1

      5:33
    • 5. Best Practices Part 2

      4:32
    • 6. Collections Best Practices Part 1

      5:17
    • 7. Collections Best Practices Part 2

      5:30
    • 8. Fraud Prevention

      7:55
    • 9. Course Conclusion

      1:51

About This Class

Are You An Accounting Student?

Are You Already In The World Of Accounting, Perhaps an AP clerk or Accounting Manager?

Do You Want To Quickly Learn and Understand The Entire Accounts Payable Cycle?

Do You Want The Top Tricks and Methods To Make Your Accounts Payable Function Work Perfectly?

If You Answered "Yes" To Any Of The Above, Look No Further.  This Is The Course For You!

*** Updated June 2019 with new content! ***

Enroll today and join the 100,000+ successful students I have taught as a Top Rated instructor!

Three reasons to TAKE THIS COURSE right now:

  1. You get lifetime access to lectures, including all new lectures, assignments, quizzes and downloads

  2. You can ask me questions and see me respond to every single one of them thoroughly! 

  3. You will are being taught by a professional with a proven track record of success!

  4. Bonus reason: Udemy has a 30 day 100% money back guarantee if for some reason you don't enjoy the course!

Recent Review:

Sasha P. says "Fantastic course, I feel like I learned more in this course than I ever did in school.  A real world, practical course on how AR works and how to make it operate as efficiently as possible.  Definitely helped me out, will help you as well."

Why You Should Sign Up For This Course:

Accounts Receivable is where the all the sales you made turn into actual funds and cash in the business.  As such, it is a very important part of any company, and a solid understanding of the accounts receivable function is very important.  Increase your accounts receivable turnover, collect funds quicker and put in place the best practices in the industry. 

In this course we will learn the basics of accounts receivable, the accounts receivable cycle the best practices that should be used, fraud prevention, collection methods and much more!

What We Do In The Course:  

  • Learn the accounts receivable cycle

  • Learn best practices for accounts receivable

  • Learn how to prevent fraud in your accounts receivable department

  • Learn multiple methods to increase your turnover and speed up collections

  • And much more!

At any point if you have a question, please feel free to ask through the course forum, I'd be happy to answer any and all questions.  

***JOIN NOW AND LEARN EVERYTHING ABOUT ACCOUNTS RECEIVABLE! ***

About The Instructor

Chris Benjamin, MBA & CFO is a seasoned professional with over 20 years experience in accounting, finance, Microsoft Excel and accounts receivable.  Having spent the first 10 years of my career in corporate settings with both large and small companies, I learned a lot about the accounting process, managing accounting departments, financial reporting, external reporting to board of directors and the Securities and Exchange Commission, and working with external auditors.  

The following 10+ years I decided to go into CFO Consulting, working with growing companies and bringing CFO level experience to companies.  I help implement proper best business practices in accounting and finance, consult on implementation of accounting systems, implementing accounting procedures, while also still fulfilling the CFO roll for many of my clients which includes financial reporting, auditing, working with investors, financial analysis and much more.  

Thank you for signing up for this course. I look forward to being your instructor for this course and many more!

Chris Benjamin, Instructor, CFO & MBA

Transcripts

1. Course Introduction: everyone. Thanks so much for signing up for the course accounts receivable. Basics. My name is Chris Benjamin. And I'll be your instructor now in the next video give you a little bit more of an introduction myself in my background. But for now, I just want to again thank you for taking the course and give you a little bit of a road map as to what we're gonna cover. So after the introductory type videos, we're gonna dive in. We're gonna learn a little bit about accounting. Wanna one some? Just some accounting basics. From there, we'll go directly into accounts receivable itself. Just a broad definitions. What is accounts receivable? How does the function work from the high level? Then we'll get into more specifics. One or some of those accounts receivable. Best practices that you really should have included at your companies. So again, whether you're thinking about going into accounts receivable, you're already in accounts receivable. You run a company and need to learn more about it. Whatever the case might be. This definitely the course for you. We're gonna learn a lot about accounts receivable, and by the end, you'll feel empowered. You'll know exactly what it entails best practices and you'll have a counter stable up and running really smoothly at your own company. So that said, let's go ahead and get started. 2. Instructor Introduction: All right, everybody, I just want to give you a quick introduction to myself again. My name is Chris Benjamin. I'll be your instructor now. I've been in the accounting and finance business for over 20 years. I started off in things like accounts payable accounts receivable. And at this point now I work as a CFO consultant, basically go into companies that are smaller that are growing and help them implement best practices. And a lot of times that also involves the accounts receivable function for newer companies that need to be set out. So over the years, I've learned I've worked with so many different companies. Studied a lot, so I really know what those best practices are when it comes to accounts receivable. And that's part of what will be covering in the course. It's just the things you definitely should be doing, the things you shouldn't be doing in your own accounts receivable department, So that's a little bit about my background. I'm looking forward to getting started. If an eight point of course you have questions feel free, send me a message through the course website, happy to answer them for you. That said, let's go ahead. Get started on learning about accounts receivable 3. Accounts Receivable Cycle: All right, everybody. So we're gonna go through the accounts receivable cycle. First of all, this is a nice, just sort of simple image. Will use this to go over and then I'll talk in more depth about each of these steps. So ah, the very first step here at the top, you'll know this is update records, issue statements. Often times people think the first step is almost some people would say invoice customers. Others would say provide estimates, some safe ship. Um, I would go a step further back, say update records, issue statements. So what is the point? Well, usually with accounts receivable. Often it's gonna be existing customers going to customers you already have. If that's the case, you want to make sure that everybody's updating want, make sure they're paid up. They're not delinquent. Last thing you want to be doing is extending further credit, which is essentially what you're doing when you ship somebody something and then build them . You don't wanna be extending credit to your customers that maybe don't deserve it. You know they're fairly delinquent or they just are completely delinquent. Haven't paid or they have a big invoice that's outstanding. So, um, very first thing I would say is to know update. So I say update records. You know, make sure that their statements are up to date on any one issue. Those statements and also you want attack on any interest. Since that's incurred or late payment penalties, you want to make sure those are up to date. Um, you'd also then want to get them over to the customer and say, Hey, depending on how the situation is I mean, if everything is good, then you can move on. But if it's not, you could contact them and say, Hey, before we could work on your next order, we need you to pay up, you know, in full. Or, you know, these old invoices. Whatever the case might be looking at estimates and orders on then agreements as well. So typically, I mean, depending on the nature of your business, some companies will just go straight to, you know, company places an order. You ship it off, you don't need to provide necessary order. Maybe they buy the same thing all the time. Ah, if that's not the case, so maybe it's a new customer. Maybe they're buying or that's an existing customer there buying something new from you. You want to provide them an estimate, Graham. And that order agreement reasons being, you know, estimate in their hands. You know, there's no firm commitment. You know, we haven't shipped anything, but they have a document then that tells them this is how much this is gonna cost me. So they're fully aware before you actually ship anything to them, then they can't later argue that you know, it was too much or you ship too much. Do you want them to get sign off on on your estimates? Um, and those fires, orders and agreements more so on the agreement side, you want to make sure you do have some sort of agreement system, whether it's they email back with approved, or they sign it and fax it, airmail it, whatever the case might be, you want to have some record that on estimate has been approved before you go ahead and fulfill it. Which brings us to the approval on shipment slash Provide services stage. You know, now that we say okay, customers in good standing, they've ordered X y z from us. They agreed to it agreed to the price, the terms, everything else You want to get that approval said that said, getting that kind of approval? Ah, in terms of a signature on the estimate, that's what you want from them. Then it's time to ship it out. Usually want to still get If you're shipping physical goods, you want records of shipments. So you want, you know, Ah, men, a bill, a manifest Bill, lady Or, you know, just the UPS tracking number. Whatever case might be the big Earth, the items in terms of both quantity and in terms of value, the more documentation you really want to make sure you have. And it's ironclad. So say you're shipping something that it's, Ah, 20 units of whatever it might be, but it's worth quite a bit of money. You don't just want toe, uh, you know, get your ups tracking number because you could have shipped anything. You could have shipped a box of rocks for all they could argue. You want to actually make sure that there's some type of signed off, you know, Bill of lading in their form that shows Yes, you know. Hey, we're shipping 10 or 20 X Y Z units, and somebody checked them and they're in the box and around the way. Ah, so next step would be to invoice the customers. So obviously you're probably gonna invoice them fairly quickly. Typically, as soon as you know the customer receives it or typically actually assumes you ship. It will also be sending out your invoice. This is part of good accounts receivable management. You want to be invoicing as quickly as possible to get the collections process going. And I said, collections that don't mean collections in a bad way. I just mean the that collecting your money from the customers process. So you send that out whatever method that might be, and we'll talk about it methods off, you know, accelerating your collections later in the course and then, lastly, we have Remittance notice, receipt of cash. So your customer pays you. However, the method might be again. We'll talk about some of the payment methods later, whatever it is, So you want to record that that payment and you want to record it quickly as well, because se there several people in your council department, and there's an order happening concurrently when a payment was just received. Well, you know, it might look bad if you call it customer. Say, Hey, we haven't received payment for X, y, Z and Royce and they say, Well, we sent it and you say, Well, we don't have it. I mean, while it's just sitting on somebody's desk, so definitely want to accelerate your when you receive cash, make sure its input input the same day s O. In essence, guys, that's the accounts receivable process. I mean, you make sure customers aren't good. Give them an estimate. Get approved, ship their goods, invoice them, receive their cash, obviously a simplified version of the process. But you kind of if you stayed within the cycle, your accounts receivable should run fairly smoothly. 4. Best Practices Part 1: All right, so in this lecture, we're gonna go over the 1st 3 ways. Just accounts receivable. Best practices. Next lecture will go over three more, and then from there will go into some collections on how to sort of accelerating. Ah, get your counselor seal. Will department running its best chicken? So to talk about these 1st 3 best practices. So, first of all, it's part of the accounts receivable cycle but provide customers with an estimate or quote . We talked a little bit about it when talking about the the cycle, but it is one of the best practices. By having a nest emit up for an estimate or quote, Let's just say estimate up front. I providing the customer with a lot of information and a lot of choices as well. You're basically telling them, Here's what you know we're willing to sell you. Here's how many, what the prices, but much more in that you'll have, like an estimated date of delivery. The credit terms, whether it's say, that's net 30 that 60 do like do before, um, items air shipped, whatever that might be, um, as well as any penalties. So you know, if not paid after 30 days. There's, ah, whatever $50 fee or there's a 2% interest or whatever the case might be, it'll all be there on the estimate. So they're well aware upfront what they're getting themselves into. So when they sign that and essentially, the estimate quote becomes kind of their document to approve, then so when they sign off on it, they've agreed to all the terms that are on that estimate. So I'm definitely useful to to do those up front and again. This is really Taylor that I mean, those were tailored towards Ah, I would say bigger, you know, bigger ticket items, one time purchases or, seldom, time purchases. You know, a company. You know, I'm thinking of something like a grocery chain who every day is buying items from their suppliers. They're probably not getting estimates. Aiken guard to you. They're not. They have, ah, a different type of agreement where they have set pricing and quantities and payment terms , etcetera ongoing. But this more definitely more geared towards somebody that's either knew that you're working with or somebody that you don't work. Maybe with all too often and you want to be in these best practices. Um, so the 2nd 1 her firm invoices air, sent for completed sales. You'd be surprised how many times I saw over my career incorporate companies where you know a sale would happen. The items would be shipped, and then voice just never went out. And whose responsibility is that? Well, I mean, it depends it It could fall through the cracks in several ways. I mean, maybe the counselor seal department, who's in charge is sending out invoices. Didn't, you know, wasn't informed that there was a sale? Or maybe they were informed, and then they kind of put it off to the side and they forgot to send it out. Or maybe there's a different process in the company where there's an invoicing department and they didn't get the information or they forgot to send it out. So, uh, the onus can lie in several different people. That just depends on where that breakdown is. So how you get around that is you have something that confirms invoices there sent, um, so again, it depends on the structure of your company. But most likely, there is some enough structure there that you could have somebody go and check that every single estimate that's been approved. A quote that's been approved has been invoiced. Um, and maybe they reconcile that again, shipping documents every day. So they say, Hey, we shipped out. You know, something to excise the company. There should be an invoice for that, you know, What was it? Etcetera? So the more documentation you can have along the way, So not just the estimate that quotes. But if you have bills relating, then obviously the shipping documents and you know, the tracking numbers and then lastly would be the invoice. So you should be able to match those all together and the third for our best practices. Review accounts receivable regularly. Just proactively stay on top of them. Look at the amounts. Look at accounts receivable aging. See who owes money, how far behind the air, how much it is and actually saw on this next slide, we're gonna take a look at in accounts receivable aging. So this is just a sample that I pulled off off the internet. Just Ah, it is completely a sample. It's a fictional company. If you're not familiar with accounts receivable aging, that definitely you want to get up to speed on what this is. It's basically a report that you can run pretty much. Any accounting system will run it, and it will take all your customers and say, for example, you know ABC Company Invoice State the due date invoice number. If there's any reference on, then what Bucket had falls into. Is it current? It's not due yet. Is that 1 to 30 days late, 31 to 60 days, 61 90 etcetera. So, um, that is definitely, ah, you know, some a report that's definitely worth while looking at, because you want to make sure that you know these customers out here in the 61 61 to 90 days and older categories, the further out it gets, the less the less likely going to collect. So, for example, there's Paul's plumbing on the bottom. Here we see you know they have one that's 31 to 60 days do and then they have one that's even older than that. That's up to 90 days late. Not the best case that you want to be into. You see that that invoice was on February 1st, for example, right here And now the date of this report is made 20 seconds. So, you know, a company that hasn't paid this already, You know, it's gonna be tough. And it was due on March 15th. So you definitely want to be picking up the phone and calling these types of customers. You don't want to see numbers out here at all. Unfortunately, the nature of the beast is you will get them and we'll talk about some of those ways to obviously, uh, do better and collecting amounts. But take a look at this report right here. Accounts receivable, aging. Definitely one of the big things you should be doing as part of your best practices on the next lecture will go over three more best practices. 5. Best Practices Part 2: All right, everybody. So these next three best practices s a number four. If you will offer a variety of payment methods, you want to give people an option to pay if you only accept checks. Well, checks on is popular these days. And, you know, now you have to wait for somebody to write the check, mail you the check in the mail. You know, now, even after they write the check, you probably got a week before you receive it. So you want to have as many payment methods as possible while not going overboard? Obviously, uh, so thinking of things like except a CH payments, which are automated Clearing house. So they're like electronic payments. Basically, um, it's fairly commonplace. Most banks. Now, when you have business counts, they will help you set up things like being able to accept a CH payments were. All you have to do is collect the customers banking information, a swell credit cards if you're able to accept credit cards. Certainly there's a bit of a fee involved. They're gonna pay a few percentage, but if it facilitates getting payment that much quicker, it's definitely something that's worthwhile. And depending on the nature of your business again. I mean, if you're a smaller business, a lot of times small businesses rely on credit cards those first few years, so it may be worthwhile to accept them. And you might just beginning pay that much quicker, using different payment methods, other ones just to throw out there. Obviously accept wire transfers, especially if you accept large amounts of money. Is like I would say, I mean anything over 1000 definitely even 500. Most people are gonna wire smaller amounts like that, but but it's a it's your accepting payments of thousands like 6000, 10,000 you definitely want except wire transfers. A lot of times, it's just easier for companies to do to do those. Ah, so number five here input customers payments quickly. So we talked about this as well in the counting site or the culture stable cycle. You don't want sort of on embarrassing thing where you know, because you're hounding customer for a payment, they say, Hey, we sent it and it turns out you did receive, and it's just sitting on somebody's desk you want in your system quickly. Eso not just for that. One reason that you don't want to be embarrassed, but as well. Two in putting the payment typically also means that's when it's getting deposited. So a customer you know does mail you a check. Well, usually goes in the bank deposit the same day that it's entered in the system. So it's sitting on somebody's desk for a week. Then it's It's not money that's in your bank accounts he wanted in there quickly as well. It's going to reflect poorly on the customer, maybe unfairly. So say they did send you a check. You receive it and it sits for a week. And then, ah, you entered in your system. Well, now, in your system, it looks like they took an extra week to pay when really it was your own fault. You guys waited too long to enter it into the system. So you want that quick same day sort of entry on one method I could give you if you receive a lot of checks. One service you might want to look into is with your bank and its basically called a lockbox. What is this? Is that instead of your customer sending you checks directly. They send us to the lockbox, and the bank will automatically every single day. Deposit those checks into your account, and they will provide you with scans of what they were. It really It provides scans and or just a report and say, Hey, ABC companies sent you, you know, $500 for, you know, invoice 1234 So you know exactly what that paid Now, obviously, you have to them be diligent. Make sure that you entering the payments in your system. So you're not bugging the customers saying, Hey, you didn't pay us when in fact they did. But nonetheless, that's one method. If you receive a lot of checks toe, facilitate that process a little more If you want to take that sort of check depositing, uh, you know, function out of your company. Ah, so last month, Last Ah, best practice here is forecaster recurring revenue. You know, use your accounts receivable. You know who your customers are that are going to be ordering the same thing month after month after month. So use that information to project forward and and get an idea of what money you might have coming in a lot of accounts receivable, you know we'll be tied into your cash forecasting for your business. So you're balancing what you have coming in with what bills you have to pay. You know you have to pay payroll. You have to pay your own suppliers, rent all those things, so use that knowledge of what money might be coming in in the future. And use that for your cash flow projections. So I would say, even beyond recurring revenue, which would be the customers that are ongoing, same every month. You can also look at accounts receivable report and say, Hey, you know, we have some big money that's due in the next 30 days, like we want to make sure we collect the lion's share of this. We don't want to let customers slide and not pay us. So use basically all the tools and information you have in accounts receivable to make your business run all the better. 6. Collections Best Practices Part 1: All right, everybody. So this next video we're gonna talk about, you know, accelerating your collections and again my sick collections Not in a negative way. I'm not saying, you know, you're out to collect on somebody who's delinquent just collecting the money that's owed to you. You know, basically, the fundamentals of cash management any business are no drag out your payables as long as you can, and collect the money that's owed to you as quick as you can. So you're kind of playing both sides of the fence. Eso these 1st 5 Then we have five more to go over the next lecture. So first thing, email invoices. You know, if your printing and mailing invoices which I mean, believe or not, cos still do you really want to switch to make emailing those invoices and much as possible ? Obviously, there's instant delivery versus a few days, and that's in general. Just pretend in the perfect world everybody pays you and they always pay you, you know, 30 days after they received the invoice. Well, if you email the invoices, they receive it on, you know, day one, if you mail them, they don't receive until day five or six. So you've already dragged out your accounts receivable, you know, an additional week for no good reason. I mean, there's also the small benefit to cost savings, time savings and, um, sort of a record as well. You know, the company, The receiving company could say we never received invoice. So now you have to mail it again. Whereas if you email it, then you know there's a record. You say, Well, I emailed it to on Tuesday or whatever the case might be. So definitely start emailing out those invoices, usually an automated feature in your accounting system as well. So no real reason to be mailing invoices. Number two, shorten up your payment turns. Um, you know, a lot of kind of the default. I would say his company's offering net 30 You know, if loves you pay us within 30 days, you know that's good. You know, if your smaller business you have earned cash crunch, you might need the shirt in that up. Shorten that up, change it to, you know, do within 15 days, or due on receipt. Then you can. You kind of have the right to start, you know, harassing people to pay you. Ah, lot sooner. So you know that 30. You know, you have 30 days to even see if they pay you, then you're gonna be pretty sure they're gonna wait 30 days to pay. You make it in that 13 And just making that simple change on your on your invoice template , you'll see money start rolling in a lot quicker now, because companies want to comply with, you know, the terms and then as well. If you have things like a penalty on their people are late or interest charges, then you'll see a lot of companies don't want to occur that so they will just pay you based on your terms. Number three on this kind of ties back as well. The best practices haven't GFT, which is electronic funds transfer and other payment options available. So FTS, which is electronic funds transfer. You know, a CH automatic clearing house, which is kind of the ft's um, no. Allow people to pay with a credit card, have people pay with wire transfer. I mean, depending on the size of your business, there several payment options. Now, you know, smaller companies that will let you uh, you know, do collection for you or, I should say, provide away from companies to pay you. You know, maybe you accept PayPal. You know, the money hits your county transferred to your bank, and it's in there the next day, way quicker than you know, waiting for a check to be mailed and then trying to cash it. I'm seeing if it even cash. So there's a lot of benefits to electronic methods. Besides the quickness, there's also the reassurance that the money is good. So definitely would consider switching to sort of any type of electronic payments that you can encourage companies to see to use those, uh, number four so established credit policies before you just start extending credit to customers and saying, Oh, yeah, you know, we'll ship your goods and, you know, pay us in that 30. You know, make sure they're credit worthy. You want to do a credit check? You wanna have policies in place that you know, have a formal credit check process that you follow. For any new customer, you get business references from them. Other companies that you know sell to them that you know, can vouch for the fact that they're good for their money. Get a bank reference as well. Um, get contact information from their company if you're able to get a credit report from on them as well. So it might sound like overkill, but you'd be surprised when things go south and you know, you're trying to collect money from this company. They're just not paying you. You're gonna wish you had done all these things. Some definitely consider establishing credit policies and sort of following them as well. Don't just let people slide through the cracks. And then lastly, ah, number five, I should say in the next lecture, we're gonna go over five more review accounts receivable regularly. This was also in our accounts are best practices. It really is a way to accelerate collections, because if you remember from best practices now you see counts that are 30 days old, 60 days old, 90 days old. You need to start, you know, cracking the whip on those old ones. We want to make sure you're reaching out to them as much as you need to really getting commitment from them. When you're gonna pay us, can you pay us half the amount now, whatever the case might be, Um, there's It's definitely proven that the longer you know, accounts receivable drags out, the less and less likely you are to get paid. So you want to get them in the door, ideally, obviously, in that 30. But if somebody gets to that Nets 60 you know it's 60 days late now. You really want to start making sure you bring those in and real those customers in and have them pay. Alright, guys, So in the next video lecture will go over five more accelerant clerk collections. 7. Collections Best Practices Part 2: all right. So number six used the telephone. Sounds simple, right? You'd be surprised how many people are adverse to actually pick up the phone, calling someone and saying, Hey, you lost money when you're gonna pay us against something I see all the time. But that's simple. Tool will oftentimes be the difference between you getting paid and someone else getting paid. You know, people don't like confrontation, even if you're the friendliest person and you call them up and just say, Oh, hi. You know, it's Chris from X Y Z company. You know, you have some invoices that your past do I want to find out when you'll be paying them. It kind of puts them on the spot. It's kind of somewhat embarrassing for them. Um, you're gonna be the one that gets paid over the person who just sends a casual email to them saying, Hey, can you pay us? I'm so that's simple. You know, two minute, five minute phone call might make the difference. I'm gonna pay no, now or later or not at all. So you definitely just wanna have, you know, whether it's you or your accounts receivable department have that policy in place. Once customers air late start giving customers a courtesy call. It doesn't even have to be rude. Just a to see, you know? You know, invoice 123 is, you know, over 30 days do now want to follow up on it and see when we can expect payment. Simple. Is that a message? And you may well be on your way to increasing your turnover. Some number seven maintain a collections record. You want to keep up. So besides just calling and leaving messages, you want a note? So you should You should be able to do this in your county system. But keep a note on when you called, who you talk to our If you left a message. You know what you said. You know, Did you just give them a friendly reminder? Did you ask them to make a payment plan? Whatever the case may be, you want some record of that? So that, um, for your own sake I mean, if you're dealing with lots of different customers, you might forget you might say, Hey, I know that I call that customer. I can't remember if I, you know, was kind of pushy and really tried to get them to pay. Or if I just gave him a gentle reminder or something else. Maybe, You know, you have a big accounts receivable department. There's several people calling on customers. Well, you want somebody else to pick up that record and be able to look at it and go, OK, it looks like we're doing you know this with this certain customer. So definitely keep some type of record. You should again be able to do that in your counting system. There should be some way to keep notes on each customer. If not, I would encourage you to set up some other type of system that works for you guys, whether it's a you know, a word base. You know, you keep notes that word on each customer. You have a Google document system on its cell spreadsheet. Whatever the case may be. Their several ways you could manage it, but just make sure you do actually do something. Number eight offer discounts for early payments. You know, customers like seeing, you know, I mean, a very standard is on invoices doing 30 days, but if you pay it in 10 days to get a 2% discount. Sure, you have to give a 2% discount, but it seems like a small price to pay to you. No one. Get your cash in the door earlier. And to be assured that, you know, you are getting your cash. So I would much rather take it, have, ah, 2% discount applied to an invoice and receive it. Then wait 30 days and then, you know, maybe the person pays. Maybe they don't. So, um, offering that 10% discount can make a big difference for some customers. Obviously, it's up to you, and you have to decide if that's what you want to do. In terms of the amount I've seen, customers are sorry for companies to offer up to a 5% discount. I mean, that definitely opens people's eyes. So something that consider on then when things start to get to the point where maybe people aren't paying up, these last two will help out. Someone has used a factoring service. Um, if you're not familiar with factories, essentially, what it is is you sell your receivables to a factoring company and they then go collect them so say you have a total of $100,000 that's owed to you. Ah, factoring service might buy them from you for 80,000 and then they go collect on them. Um, so the wind for you is you basically wipe out all your receivables or all the ones that you sell to them. Ah, the almost downside is you do it at a discount. So you're owed 100,000. You might only get 80,000 or 70,000. Um, so that's the way you know. You have to decide if that's something you want to do for your company. Obviously, if you're in a cash crunch, this is something companies do. Often they sell, they factor their receivables, Um, or you just want to deal with them anymore. You know, you just want to get them off your books. You get paid for them what you can you'd rather take the 70%. Then, um then wait and see if you get 100%. Uh, just another mention there to the older the receivables, the less you're going to get from the factoring company for them, and then lastly, use a collection agency. So obviously that's a move when you're definitely not. You know, you've had no luck collecting from your customers. Just hire collections agency. Let them be the ones that go after them. They tend to be very aggressive. You're probably gonna lose the customer, but most likely if they're not paying you at all, chances are they're not a customer that you want long term. Anyway. So, um, you have to keep in mind that you're in business, you know? You sold something. You haven't been paid for it yet, so collection agency will go after them. Ah, it's different from factory in the sense that the collections agency only makes money if they collect, but as well, you will only get money when they collect. So it's not like the collection agencies paying you up front for anything. They're just kind of your bulldog. They go after your customers when they get paid, they give you a port year portion. And again, it might be a similar structure. Like you get 70% of mount or last. Possibly it's going to depend on how well the receivable is as well and how much effort they had to put into it. 8. Fraud Prevention: all right, everybody is next. Let's talk about fraud prevention. So, unfortunately, fraud is a reality. Um, without good controls in place, it unfortunately tends. That happen. Not everybody's a bad person out there looking to actually come steal from your company. But sometimes you often hear there's a crime of opportunity, like somebody to seize the whole in system. They see it's being ignored and they tested, and they see that they can take advantage of a situation they're in and they just do it. And it's not because they would typically do that, but because there was the opportunity in front of them. They did it. So no excuse for them, obviously. But I'm just saying, If you implement good fraud, prevention methods and best practices, you kind of plug up those holes so they won't even be there. And you'll prevent people whether they're just sort of by circumstance or they actually looking for a way to steal, you'll be able to prevent those self. That said, let's look at our fraud prevention methods. So, first of all, train employees and management to recognize fraud, so there's lots of different types of fraud when it comes to accounts receivable were not so much can examine actual types of fraud and air. So much is to tell you what you should be doing to prevent fraud as a whole. There's certainly lots of ways that, um, fraud can have accounts receivable. I mean, you have to think of it. I mean, it's the gateway to your company where money comes in from your customers and then ends up in the bank. So, um so what you want to be able to do first point train employees management to recognize the fraud, teach some all the different ways that fraud could happen, depending on your company. The method you haven't plays the ways you accept payments, you know, that can promote that will kind of determine what methodologies might be available for someone to possibly commit fraud. So, uh, look at those and then obviously trained employees management to recognize themselves. Somebody sees something weird. It might ring a bell. Segregation of duties is a big one. So, you know, if you have a smaller company, this is a bit tougher if the larger you want to segregate duties, so things like the person who you know opens the mail isn't the same person who enters. You know the checks in the counting system and that person is not the person who goes to the bank. You know, there's just too many opportunities for somebody to receive something. Maybe pocket it, um, you know, do something in the accounting system toe hide the fact that the payment was received. So the more segregation you can create between the specific duties and I mean it is this minute, as the person is, it opens The mail is not the person who enters in the system, and that person is not the person who's going to the bank. Um, you want to look for red flags and behavior changes, so, you know, obviously small frauds not gonna make a huge impact on somebody's life. But they're certainly stories out there of, you know, the accounts receivable person or accounts payable person. All of a sudden starts driving a Ferrari or buys a new house, um, starts going on lavish trips and over a cruises, and you think, How can they afford that? You know, you know that person and their spouse really don't have the income to live that lifestyle well, that's, you know, the red flags and those are those are very much, uh, indicators that something might be going on. I'm not like a definitive like, yes, something is going on, but certainly something that you wanna question. Try to maybe get some insight into how they're able to afford this better lifestyle. Um, investigate changes in vendor patterns. So if you have a vendor that, you know, it's always bought, you know, $1000 a month worth of whatever it is you sell. All of a sudden you notice they're buying 1500 to Brian 2000. Um, you go and look, there's just some weird patterns. You know, they they still make their normal order on the 15th but for some reason, they've also started doing it order on the 18th. That wouldn't quite makes sense, you know? Why would they need a second order three days later? Possibly somebody is using them as sort of a way to commit fraud in the accounting system. So those changes inventor patterns doesn't excite me. There's something up with that vendor. Specifically, it means that somebody is using at tow, hide fraud require cross training and rotation of duties again. You kind of need a big enough staff to do this. But certainly if you have it, you can do it. Cross training, I mean, is important. Regardless, forget fraud prevention. You want to make sure your staff has crossed trained so that somebody's out sick. You know, somebody can still do jobs. Um, you know, somebody up and leaves, Um, where you do find something that's wrong, You know that you find a fraud issue and something needs to be fired on the spot. You need somebody who can step in and so always cross train your employees. That's good. Best business practices, regardless, and then rotation of duties. This one's a bit tough because, obviously, depending on the size of your company. But if you have, you know, an accountant and a general account of staff count accounts receivable, accounts payable. You know, the general account probably doesn't want to do accounts receivable. From that said, though maybe your accounts payable and accounts receivable person could switch off. Or maybe your general count could like, once every one week out of every quarter. They do accounts receivable. Justus. Part of staying up to date on the training And if if they happen to catch something, they then would be someone to maybe spot something where that's going on, implement a whistle blower program to tell people. Hey, if you see anything, you hear anything, find anything you know. Don't be so. I don't want people to be scared that their jobs are in jeopardy. However, you structure this program whether it's an anonymous system. Ah, are there's a reward If some somebody turns in, somebody else's doing something bad. However, it's structured. You want toe, have that whistleblower program in place. It encourages people just to report bad behaviour. It's too easy for somebody to say, you know, say your staff accountant learns that your accounts receivable person is doing something bad. But the stuff account persons like, well, it doesn't really impact my job. And you know, I don't want to put my job at risk, so I'm just gonna turn the other cheek and not even look. But if you have a fraud, are whistleblower program, you know, maybe there's, you know, the reward. Hey, if you, um if you see anything that looks bad and reported and you know it turns out it is you get , you know, $500 reward, you know, anonymously. Of course, they're not gonna do it at the company meeting, but those types of incentives might help whistleblowers who do find stuff and just don't want to report it. Perform surprise audits. So, you know, and you want to be diligent about this. It's easy for people to say I'm going to surprise. Out of what? I'm gonna do it every Monday morning. No. You want to definitely make these sort of all over the place. Have your your management, your accounting manager, your CFO, whoever it is, do some type of surprise audit, and it needs to be very much a surprise that needs to be randomized on what they look at. Needs to be randomized as well. You know, they need to be looking at different vendors and different things. You know, this time they're gonna look at, uh, you know, they want to see actual backup. They want to see invoices and shipping documents the next time they're gonna review, uh, you know, new vendors, you know, and make sure that all new vendors in the system match. You know what's been approved, etcetera and Lastly, you could hire professional auditors to examine the books. Um, you know, have some. If you suspect something is going on, you can't quite find it. Uh, where you just, you know, maybe you don't even suspect that you just like a nice sort of, you know, check every once a year, Um, hire professional auditors. Typically, I would say you do this, though, when you do suspect something is going on and you're just not able to find it or you what really went hard proof. And you really want it, like, fully exposed. You might hire professional auditors. Obviously it have toe probably somewhat. Be a surprise. Just say, Hey, you know, this week we're having an audit. You know, you get to take the week off whatever the case might be, because you don't want the person they're trying toe fix issues or hide things further. So, um so yep. So hire professionals to examine the books and you might expose from fraud. So hopefully, by implementing all these or having the metric disposal, uh, you'll basically be in a position where there won't be any fraud going on because people know that there's way too many ways that they could get caught 9. Course Conclusion: All right, everybody. That's the course. Thank you so much for taking it. So let's just go over a few final points and then, uh, have some just sort of wrap up points as well. So, first of all, counter stable. That's the gateway to your company receiving the money that you've earned. So you definitely want to make sure you have the best practices in place. You want to eliminate fraud opportunities. You don't need somebody taking the money that you worked really hard to earn. And you want to increase your accounts receivable turnover. So get that money in the door as quick as you can. So you do those three things, you repeat him. You don't just stop. You don't let just sort of implement best practices ones. You don't implement fraud prevention techniques once and leave it. You need that continually. Be on top of these things will always be looking for better ways to, you know, increase your turnover. You want to readjust, you know your ways to eliminate fraud. You know, new employees need to be trained. You're constantly, you know, there might be new methods that come out. Maybe you update your county software. Now you need to tweak how you do things. So, um, always be on top of its Always be thinking about ways to improve your counselors, the little department on the next side, just a little summary about myself. So feel free to contact me. Your best bet would be actually to reach me through the course website. Ask any questions that you had during the course, happy to answer them for you. Ah, one last point. Two last points. I encourage you to check out my other courses as well of several accounting and finance accounts. Payable accounts stable, etcetera related courses available. I'd be happy to be your instructor on yet another course or more, and then, lastly as well. I love hearing your feedback on my courses. So if after you finish the course, you can provide me feedback through the course website itself that has its own feedback system. Anything I can do to get those star ratings happy to oblige and again, ask those questions away. So that's it. Everybody again, my name's Chris Benjamin. It's been a pleasure being your instructor and have a great day