Accounting
Trump expected to narrow Treasury chief options by week’s end
Published
2 weeks agoon
Donald Trump intends to narrow the shortlist of candidates for Treasury secretary this week and is leaning toward someone with a Wall Street pedigree for the job, according to people familiar with his plans.
Names that have been floated for the Treasury role include Howard Lutnick, chief executive officer of Cantor Fitzgerald LP, hedge-fund billionaire John Paulson, former George Soros money manager Scott Bessent and Virginia Governor Glenn Youngkin, a former Carlyle Group Inc. executive.
Bessent met with Trump at Mar-a-Lago on Friday, but the meeting was not an interview for Treasury, according to people familiar with the process.
Trump’s transition planning is off to a quick start after the Republican notched a decisive win over Vice President Kamala Harris last week, allowing the president-elect to immediately pivot to selecting policy and personnel for his second White House stint.
Trump’s Wall Street allies are urging him to appoint someone with deep finance industry knowledge to serve as treasury secretary, advice that the president-elect’s team has indicated he’ll follow, according to people familiar with the process. A wide swath of tax breaks expire next year, giving Trump the opportunity to broadly shape fiscal policy as he did with his 2017 tax cuts.
Treasury secretary and secretary of state typically are the plum, high-profile jobs that presidents-elect fill first. Trump expressed such disdain and regret following his first term about his choice of Jeff Sessions for attorney general and Jim Mattis as secretary of defense that allies expect him to take those picks seriously.
Senator Bill Hagerty has been in the mix for both Treasury and State, but Trump’s team is reluctant to appoint senators to top jobs because they do not want to diminish the Republican margin in that chamber, even temporarily.
In most cases, governors appoint candidates to fill their state’s vacated Senate seats, a process that could leave Republicans down several members for weeks or months, potentially hobbling the GOP’s ability to pass legislation or approve Trump’s political appointees in the early days of his administration.
Help wanted
Job interviews will happen at Mar-a-Lago, Trump’s golf club in Palm Beach, Florida. He’s expected to receive lists of five to eight names for each cabinet job, with PowerPoint presentations about each person, according to people familiar with the process.
Next to each proposed pick is the name of who recommended him or her, giving Trump the ability to weigh how important the candidate is to his inner circle. Trump’s family members, donors and former White House aides have all submitted names for consideration.
“President-elect Trump will begin making decisions on who will serve in his second administration soon. Those decisions will be announced when they are made,” Trump spokesperson Karoline Leavitt said in a statement.
Already, Trump has appointed the first female White House chief of staff, Susie Wiles, who ran his campaign. She is expected to oversee the transition, pulling from the thousands of names that Lutnick, a transition co-chair, has compiled to fill the roughly 4,000 political-appointee jobs in the federal government.
Lutnick spent months meeting with members of Congress, donors, business executives, conservative leaders and former Trump administration officials to create a database to quickly name and fill Trump loyalists into key administration posts.
The jockeying for jobs has already spilled into public through leaks and counterleaks.
Robert Lighthizer, who served as Trump’s U.S. trade representative in the first term and is the architect of his sweeping tariff proposals, is also among the candidates for Treasury.
But a recent report in the Financial Times, which said Lighthizer had been offered the same job he previously held, was read by some involved in the process as an attempt to sideline him from the Treasury role. Trump did not offer him the USTR post, according to people familiar.
It’s possible Lighthizer — who has already begun creating plans for tariffs involving China and the European Union — will end up with a broad portfolio within the White House overseeing trade policy across the administration, people familiar with the process said.
Should Trump tap a finance industry veteran for his Treasury chief and give Lighthizer power over trade issues, policy battles are likely to play out the same way they did during his first term.
Back then, clashes of ideas often resulted in bitter fights that played out in the Oval Office in front of Trump — who likes those discussions to be part of his decision-making process — and sometimes with the press or foreign delegations present.
Linda McMahon, who is serving alongside Lutnick as a transition co-chair, is working with her staff to draft a series of executive orders Trump could issue on immigration, trade, energy and other areas in the early days of his administration, according to people briefed on the efforts.
The group is strategizing on how to pass another sweeping tax bill next year, the people said. McMahon, the former head of the Small Business Administration, is also in the running for the top job at the Commerce Department.
Trump will meet President Joe Biden at the White House on Wednesday — accepting an offer the former president didn’t extend following Biden’s 2020 win, when Trump contested the results.
Transition officials have suggested they’re prepared for large-scale turnover in the administration in 2026, which could coincide with Republicans losing some seats in Congress, making it more difficult to pass legislation. The goal is to complete the bulk of Trump’s agenda before the midterm elections, according to a person familiar with the matter.
A smaller Senate majority — or a Democratic-led chamber — in the latter half of Trump’s term could also make it more difficult to confirm new political appointees to administration jobs. The team is recommending to prioritize harder-to-confirm candidates in the first tranche of appointments and considering names for future rounds that may be more palatable to some Democrats.
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Major accounting firms have been placing huge bets on artificial intelligence, having invested billions upon billions of dollars in the past few years alone. This is done with the understanding that AI will ultimately reduce expenses and drive profits. Yet, as always, it takes money to make money: fully realizing the potential of artificial intelligence can come with a hefty price tag, encompassing both short and long term expenses for not just the AI systems themselves but everything else that enables their effective use.
The AI models themselves, of course, represent a significant R&D expense. Whether for internal efficiency, client engagements or both, building and training these models is no casual affair, requiring skilled specialists operating sophisticated software to create, something with which Doug Schrock, managing AI principal for top 25 firm Crowe, is well familiar. His own firm has spent a great deal of money developing custom AI solutions for things like tax and audit that are now used by staff every day, as well as Crow Mind, a gateway portal for all of the firm’s AI solutions. It has also devoted significant resources towards building bespoke AI solutions for clients, particularly in cases where they need something that simply does not exist in the market today. He compared it to making a custom Excel spreadsheet but far more complex.
“It’s like you buy Excel. Here’s Excel. But you’ve got to configure it to your business case, so there’s a whole lot of customization to make the actual spreadsheet do what you need it to do. We see that a lot: you buy the suite, but you need a bespoke solution… Configuring the hardware, chaining together multiple agents to do the tasks, automating it, that takes work,” he said.
Chris Kouzios, chief information officer for top 50 firm Schellman, added that developing an AI system may appear to be a one-time spend at first, but considering things like maintenance, integrations and upgrades, each model can also represent an ongoing expense.
“If you think of the initial build, you could call the initial build one time, although like any piece of software it will be continually approved over time, so I look at it from both perspectives,” he said.
Big data, big costs
But the development costs of AI models are only one part of the overall expense. Just as significant, perhaps even more so, are the fees that come with hosting and accessing these models in the cloud. Running AI, especially generative AI, is very data intensive, which has served to accelerate cloud costs that have
“Your compute will go up at least exponentially over time and one of the things I think we’re going to see, and this is just future forecasting a little bit, I think clients will in general, not just in my space, be more comfortable when they feel they’ve got a little control over what they’re doing and what is done. In the cloud at the beginning people were terrified of putting their stuff there, we’ll see the same stuff with AI, we’ll probably have additional costs for spinning up instances for clients nervous about what goes where,” said Kouzios.
Crowe’s Schrock reported similar things, noting that the major cloud hosting companies saw the opportunity for revenue generation via AI hosting and are already capitalizing on the situation, as evidenced in the fees they charge. The reality is that generative AI uses a lot of data, which means higher data costs from cloud providers who run the infrastructure it rests on. He talked about a recent meeting he had with Microsoft, a strategic partner with Crowe.
“They’ve got 4 million servers across the US. They’re super interested in AI, not just because of Copilot but because we’ll be using Azure, using their server computing power to run the LLMs we write. They want to drive more Azure service dollars. So… we’ll be having more computing power costs for us through Azure,” he said.
Accounting solutions vendors have noticed this too. Brian Diffin, chief technology officer for business solutions provider Wolters Kluwer, also noted that generative AI has indeed led to higher cloud costs, which has challenged the company to find ways to release AI-functional products in an economically sustainable way.
“Gen AI is very CPU intensive, so one of the challenges we face—we’re doing a lot of experiments with this— is there’s so many approaches on how you would implement a gen AI based piece of functionality in software. We’re evaluating not just the LLMs in terms of what those capabilities would produce but what is going to be the cost of that feature when we go to production,” he said.
Data shows that this is happening not just in the accounting space but across the economy as a whole.
“GenAI is creating a cloud boom that will take IT expenditures to new heights,” said Chris Ortbals, chief product officer at Tangoe. “With year-over-year cloud spending up 30%, we’re seeing the financial fallout of AI demands. Left unmanaged, GenAI has the potential to make innovation financially unsustainable.”
The report noted that cloud software now costs businesses an average of $2,559 per employee annually. Large organizations spend an average of $40 million on cloud fees annually, with very large organizations worth more than $10 billion spending $132 million annually.
However, while cloud costs are rising due to AI, leaders are also confident that they can be managed. Schrock said his own firm has controls in place specifically to monitor data usage to avoid outsized costs. For instance, recently they tried a new LLM tool from Microsoft that caused a short 3,000% spike in usage, but firm leaders received an alert and quickly stepped in.
“It’s not like when you get surprised by the electric bill. You put controls in place to do things smart,” he said.
Further, while the costs have increased, he said they have still gained more than they lost in terms of increased efficiency and productivity. The extra fees are still lower than the cost of hiring an entirely new human, and the quality of work is better than what humans would accomplish alone. So while their Microsoft Azure bill is higher, they’re also able to deliver more for less cost overall, so it has been a net positive.
“What we’ve been talking about are the costs to run AI. I’ve got the cost to run a car but it also gets me places more easily. The cost will be a thing but used appropriately it will be great,” he said, adding that it’s important to use the right tool for the right situation; maybe you don’t need to access the high-data AI model to solve a problem, maybe Copilot would work fine.
Diffin raised a similar point. While he conceded overall costs have gone up, the money has been well-spent in terms of product development.
“Certainly gen AI capabilities are increasing in cost, and overall costs have gone up because we’re using more and more of what [Microsoft] offers, and so what translates into for us is developing and releasing products faster than if we were to develop everything ourselves,” said Diffin.
On top of cloud fees, subscriptions and licenses were also mentioned as a significant ongoing expense. This includes subscriptions not only for the tools used to create and maintain AI systems but also for AI solutions that the firm chooses to buy rather than build. While the individual subscriptions may not be much, when considering the size of certain firms, like Crowe, they can quickly add up, especially considering there are multiple products the firm subscribes to.
“Everything is a subscription. So you have all the different types of subscriptions. Crowe is making significant investments in ongoing software licensing for the leading enterprise AI solutions, things like Microsoft Copilot for example. We expect everyone in the firm to be using that in 2025. It’s over half right now … We’re also buying specialty AI based applications to fit particular needs and things like copy AI for marketing and search, and there’s a whole suite of specialty apps that we sign up for with specialty use cases, so that becomes the ongoing expense,” he said.
Labor costs, training costs
And then there are the people who create and maintain these models, often software engineers and data specialists. While often touted as a labor saving device, AI can come with surprisingly large labor costs, according to Schellman’s Kouzios.
“I would say in general, probably as close to 15-20% of my IT budget will be spent on AI, closer to 25% for the first year [of deployment]. Of that, if you take that number and break it out, 85-90% is labor,” he said.
The firm, which already hosts a large number of technical specialists, recently hired more to support the firm’s AI ambitions, seeking to shore up its machine learning, data analytics and product management expertise, which allows its staff to focus on “building what it is we want to do.” While this does represent a spending increase, he is confident that the efficiencies they uncover will increase firm-wide capacities over time.
“I think we’ll get to a point where, [though] we know the costs will go up, ROI on this should be deferral of cost or deterrence of cost, not having to spend money in the future we’d otherwise have to spend. For example, peak season comes up and you need to either hire employees or temp employees,maybe we can avoid that in the future,” he said.
Another component of labor costs is training the non-technical staff in using the AI systems the technical staff develops and maintains. Schrock, from Crowe, said that, in addition to hiring more experts, the firm has dropped cash on in-depth training and development in things like how to use Microsoft Copilot and other generative AI tools and incorporate them into a workflow. With this training has also come changes in business processes and job descriptions that needed time to properly digest. While there is some learning curve involved, he felt education like this was essential to fully implement the firm’s AI vision.
“These tools don’t inherently have value, they derive it only through their application to solve problems. So there is one time cost of upskilling and process redesign to incorporate that into the business,” he said.
And it is not just the humans who need training. Kouzios said one idea he has been exploring lately is assigning those trainers who’ve been educating the human staff to the AI models themselves, which often begin in an almost child-like state and require data input to be effective.
“I’ve been exploring talking to them about training the models because, this is my experience in IT, nerds are very good at the tech, but here are some things we lack and teaching—when I brought it up to them, I meant teaching the models—the tech people hated the idea, so I might tap into some of [the trainers’] time too,” he said.
Heat vs light
Yet, while big money is being spent on AI at accounting firms, they should not necessarily take too much stock in the marquee headlines of this firm spending that many billions on AI or that firm spending many more billions still.
“The billions of dollars here, is more bragging about an investment level. Well, investment level can be measured in a number of different ways. It can be measured by some ginned up cost where you reallocate peoples time and come up with some marketing number on costs, but I don’t put a lot of confidence in those as an expert in the field,” said Crowe’s Schrock.
Kouzios, from Schellman, raised a similar point, noting that there are a lot of people making big dramatic announcements that, upon closer inspection, are not that significant.
“You’ve seen those press releases, saying we bought chatGPT for our 85,000 employees, we’re AI enabled. Yippee, well done. For 20 bucks a month I could do that too,” he said.
When looking at what firms are spending on AI, Schrock said to look not at the jaw-dropping number they announce but in actual deliverables they produce.
“What I wanna understand is how many people are utilizing it, what unique IP they have created, how aggressively is it being incorporated into service lines, how aggressively do they take this into market—that is a measure of your investment level in AI more so than some number,” he said.
But what about smaller firms? Turns out, their experiences with AI costs are much different than large scale firms with international footprints. We intend to explore this issue more deeply in another story soon.
Accounting
TCJA extensions or revisions: What lies ahead for 2025
Published
5 hours agoon
November 25, 2024Enjoy complimentary access to top ideas and insights — selected by our editors.
Many accountants were doubtful of Donald Trump’s chances for a successful reelection on Nov. 5, despite the fact that many also thought he would be a better candidate for the profession. With his return to the White House now confirmed, the waiting game begins to see which promises of wide-sweeping change to the tax landscape come to life.
The Republican majorities in the Senate and House of Representatives will grant President-elect Trump an easier time in refreshing many of the expiring provisions in his 2017
“These changes reshaped tax planning for both individuals and businesses, creating new opportunities for savings,” said Arron Bennett, CEO of the Oak Ridge, Tennessee-based tax planning firm Bennett Financials.
It’s increasingly likely that Trump will seek to make certain provisions of the TCJA like the QBID permanent, as was put forward in the
Mark Luscombe, principal analyst in Wolters Kluwer Tax and Accounting, said cementing the sunsetting provisions of the TCJA “would be very expensive” and that a more beneficial compromise for addressing deficit concerns would be “to just extend them for a few more years.”
“An extension would benefit almost all taxpayers; however, the bulk of the tax benefit would go to higher-income taxpayers,” Luscombe said.
Read more:
Regulatory uncertainty is just one question looming across the profession, however. With control of both houses of Congress,
Much of the funding granted to the IRS under the Inflation Reduction Act of 2022 has gone towards strengthening the agency’s enforcement capabilities, which in turn generate revenue. Other funds have been used to bolster taxpayer services and to support regular operations.Andrea Harrington, a CPA and partner at the Glastonbury, Connecticut-based accounting firm Fiondella Milone & Lasaracina, said she hopes funding for the IRS is maintained, specifically directing resources towards “processing amended returns related to COVID relief provisions.””The uncertainty over what exactly will happen makes planning a bit more challenging. … We’ll be watching legislative proposals even more closely so we can pivot in our recommendations as needed,” Harrington said.
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Below is a compilation of expert insight and predictions into what the tax landscape could look like in 2025 and what professionals need to start considering during planning discussions.
IRS funding in limbo following Trump win
In the wake of Trump’s successful bid for reelection, many accountants predict the new administration will seek to cut the IRS’s funding more so than in recent years.
Republican legislators have already seen success in efforts to
“I think IRS funding is at significant risk right now, both the annual appropriation funding as well as the remaining IRA funding,” Rochelle Hodes, Washington National Tax Office principal at the Top 25 Firm Crowe, said in an interview with AT’s
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A look at Trump promises for the 2025 tax landscape
Trump’s campaign promises on taxes were numerous and sweeping, ranging from lowering the corporate tax rate and tax credits for caregivers and those purchasing domestically made automobiles, to the return of 100% bonus depreciation.
As the countdown to his second term continues, along with the approaching deadline for many parts of the Tax Cuts and Jobs Act of 2017, much is up in the air.
“No one has a crystal ball on what’s going to happen here, but certainly it’s a little bit clearer based on a Trump victory than it would have been based on a Harris victory,” Brian Newman, a tax partner at Top 25 Firm CohnReznick in Hartford, Connecticut, said in an interview with AT’s
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What are preparers worried about in the coming administration?
Accounting professionals and preparers say that a new but not wholly unfamiliar Trump administration, will bring new approaches to taxes and the surrounding regulatory environment with it.
Kelly Myers, an advisor with Myers Consulting Group, and formerly a career IRS officer with 30-plus years of experience, told AT’s
“People will be watching as they move forward on the Tax Cuts and Jobs Act; the biggest thing is the SALT limitation with its $10,000 cap,” Myers said.
The provisions of the TCJA are top of mind for Trump, as issues like the qualified business income deduction and a renewed R&D credit operating on a dollar-for-dollar basis are up for change.
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What is Trump focused on when it comes to taxes?
President-elect Trump had an eventful first term when it came to tax policies, implementing the likes of the
The estimated price tag for extending all the provisions of the TCJA amounts to roughly $4.6 trillion, according to Rochelle Hodes, Washington National Tax Office principal at the Top 25 Firm Crowe.
“If they are allowed to expire, that would raise the tax for many individuals, which is an unattractive proposition for any president or for Congress,” Hodes said in an interview with AT. “The decision will have to be made about which will be allowed to expire, whether or not some of the provisions will be changed in order to accommodate whatever budget goals are agreed upon, then the decision and consensus will have to be made concerning offsets to pay for the resolution of expiring provisions.”
Read more:
Approaching the impending tax quagmire in 2025
Industry professionals achieved a small measure of TCJA relief following Trump’s successful bid for reelection, as many expiring provisions are now much more likely to be renewed.
But where other legislative efforts are concerned, a
Jonathan Traub,
“You will need almost perfect unity — more so in the House than the Senate,” Traub said. “This really gives a lot of power, I think, to any small group of House members who decide that they will lie down on the train tracks to block a bill they don’t like or to enforce the inclusion of a provision that they really want.”
Read more:
Accounting
How to Mastering Accounts Receivable Management to Maximize Cash Flow
Published
2 days agoon
November 23, 2024Effective accounts receivable (AR) management is vital for maintaining a company’s cash flow, profitability, overall financial stability and is considered to be best practice for accounting management . By implementing strategic AR practices, businesses can reduce payment delays, minimize financial risks, and improve relationships with customers. Below are in-depth strategies for enhancing AR performance, ensuring financial health, and maintaining strong client relationships.
Establishing Formal Policies and Procedures
A well-defined set of policies and procedures is the foundation of effective accounts receivable management. Clear guidelines ensure consistency across the entire order-to-cash cycle, from invoicing to collection. These guidelines should outline the specific steps involved in generating invoices, tracking payments, and handling overdue accounts. Clearly defined roles and responsibilities for team members contribute to accountability, while setting payment terms and due dates helps streamline the process.
Creating a documented standard operating procedure (SOP) that employees can refer to ensures that everyone follows the same approach, minimizing errors and reducing confusion. Policies should also specify the consequences for late payments, including any penalties or fees. Establishing escalation protocols—such as follow-up reminders, late payment notices, and legal actions if necessary—keeps the collection process organized and efficient.
Leveraging Advanced Technology for Efficiency
Incorporating technology into accounts receivable management can significantly enhance efficiency. Advanced AR software platforms offer a range of features designed to automate and optimize the process, reducing the manual workload and minimizing errors. These platforms often include automated invoicing, payment tracking, customer communication, and collections management.
Automated systems can send reminders for upcoming payments and follow up on overdue accounts without human intervention. This automation saves time and ensures consistency in communication with clients. Many platforms also offer integrated billing systems that sync with existing account receivable software, providing a seamless flow of information across financial operations. Customer portals allow clients to access statements, make payments online, and review their payment history, fostering a more convenient and user-friendly experience. Some of the best account receivable software are: QuickBooks Online, Xero, Sage Intacct and NetSuite ERP.
Implementing Regular Accounts Receivable Reviews and Aging Analyses
Regular reviews of accounts receivable are essential to maintain a healthy cash flow. Implementing a schedule for periodic AR reviews allows businesses to monitor the status of outstanding balances and identify potential problems early. Aging analyses categorize receivables based on how long they have been outstanding—30, 60, or 90+ days—highlighting overdue accounts that require immediate action. These reports are valuable tools for assessing the health of cash flow and making informed decisions about which accounts to prioritize for follow-up.
Analyzing AR data helps identify patterns and trends that may indicate broader issues, such as recurring late payments from specific clients or seasonal fluctuations in cash flow. Businesses can use this data to refine their credit policies and improve collection strategies. A disciplined review process also enables organizations to proactively address cash flow challenges before they escalate, ensuring financial stability.
Strengthening Customer Relationships for Improved Collections
Maintaining positive relationships with customers is a crucial aspect of effective AR management. Accurate and up-to-date customer information, including contact details and payment histories, enables personalized service and facilitates smoother transactions. Keeping comprehensive customer profiles with relevant data helps businesses address issues quickly and negotiate payment plans when necessary.
Clear and transparent communication builds trust with clients, making them more likely to prioritize timely payments. Sending invoices promptly, following up with friendly reminders, and providing clear payment instructions are all practices that enhance client relationships. By understanding customers’ payment behaviors and preferences, businesses can tailor their approach to improve cash flow without jeopardizing long-term partnerships.
Implementing Credit Risk Management Strategies
For companies that extend credit to customers, managing credit risk is a critical part of AR management. Implementing structured credit assessment processes allows businesses to evaluate the risk associated with each customer before offering credit terms. Conducting thorough credit checks and setting credit limits based on each client’s financial history and creditworthiness can significantly reduce the likelihood of non-payment.
Businesses should regularly review credit terms and limits to ensure they remain aligned with evolving market conditions and customer circumstances. Implementing dynamic credit policies that adapt to changes in a customer’s payment behavior or overall economic environment helps minimize risks and protect cash flow. A well-executed credit management strategy reduces the impact of late payments and uncollected debts on the company’s finances.
Utilizing Aging Reports for Strategic Analysis
Aging reports are essential tools for understanding the status of outstanding invoices. These reports categorize receivables based on the duration since the invoice was issued, making it easier to identify overdue accounts. Regularly analyzing aging reports helps businesses prioritize follow-up efforts, allocate resources effectively, and take targeted actions to minimize delinquencies.
A data-driven approach to AR management not only enhances the efficiency of collections but also provides valuable insights into the company’s financial health. Recognizing patterns in payment behavior can inform adjustments to invoicing procedures, credit policies, and follow-up strategies. Accurate and timely aging reports are crucial for maintaining cash flow and ensuring that overdue accounts are addressed promptly.
Balancing Automation with Human Oversight
While automation offers numerous benefits for accounts receivable management, human oversight remains indispensable. Automated systems excel at handling routine tasks like invoicing, sending reminders, and updating payment statuses, but they cannot replace the expertise and judgment of experienced professionals. Human involvement is necessary for analyzing data, handling complex payment disputes, and maintaining customer relationships.
Businesses should strike a balance between automation and manual oversight. Leveraging automation for repetitive tasks allows AR teams to focus on higher-value activities, such as negotiating payment plans and resolving disputes. A well-rounded approach that combines technology with human expertise ensures that AR management remains adaptable and responsive to changing circumstances.
Proactive Collections and Follow-Up Procedures
A proactive approach to collections is crucial for maintaining healthy cash flow. Sending invoices as soon as work is completed and issuing payment reminders well before the due date can significantly reduce payment delays. Establishing a structured follow-up schedule for overdue accounts—such as sending gentle reminders at 15 days and more assertive notices at 30 days—helps businesses maintain consistent cash flow.
Maintaining detailed records of all payment communications provides a clear audit trail and ensures that the collection process remains professional and well-documented. Professional yet firm follow-up procedures demonstrate the company’s commitment to timely payments while preserving the relationship with clients.
Monitoring Key Performance Indicators (KPIs) for Continuous Improvement
Tracking key performance indicators (KPIs) is essential for assessing the effectiveness of AR management strategies. Metrics such as Days Sales Outstanding (DSO), average collection period, and the percentage of overdue accounts provide valuable insights into cash flow health. Setting specific goals for these KPIs encourages continuous improvement and helps identify areas where adjustments are needed.
By regularly monitoring and analyzing these metrics, businesses can refine their AR processes, implement targeted strategies, and optimize collections. Effective AR management not only improves cash flow but also strengthens the organization’s financial foundation, supporting sustainable growth and long-term success.
Accounts receivable management services
Several reputable accounts receivable management services are available to help businesses enhance cash flow and streamline collections. TSI (Transworld Systems Inc.) specializes in customized debt collection and payment reminders, reducing delinquency rates through targeted analytics. Atradius Collections offers global AR management, focusing on credit insurance and tailored solutions for international clients. Dun & Bradstreet Receivable Management Services provides comprehensive AR solutions, including credit risk assessments and data-driven strategies. Gulf Coast Collection Bureau supports industries like healthcare and utilities with services ranging from AR outsourcing to debt recovery. ABC-Amega delivers global commercial debt collection and AR outsourcing, assisting clients in managing complex cases and reducing payment delays. These services are designed to enhance financial stability and improve payment practices across various industries.
Conclusion
Optimizing accounts receivable management is a critical step toward ensuring consistent cash flow and financial stability. By establishing clear policies, leveraging technology, conducting regular reviews, and maintaining strong customer relationships, businesses can minimize risks and improve payment efficiency. A combination of automated tools and human oversight, alongside a proactive collections strategy, allows organizations to manage their receivables effectively. Prioritizing AR management is not just about getting paid—it’s about securing the financial health and longevity of the business.
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