{"id":72,"date":"2021-09-29T17:18:44","date_gmt":"2021-09-29T11:48:44","guid":{"rendered":"https:\/\/www.zikzuk.com\/blog\/?p=72"},"modified":"2021-09-29T17:20:31","modified_gmt":"2021-09-29T11:50:31","slug":"switch-to-better-account-receivables-management-with-bfm","status":"publish","type":"post","link":"https:\/\/www.zikzuk.com\/blog\/switch-to-better-account-receivables-management-with-bfm\/","title":{"rendered":"Switch to better account receivables management with BFM"},"content":{"rendered":"\n

On an average, 90% of invoices in India are still handled manually and, 12% to 15% of them require a payment reminder. As a business takes more time to collect the receivables, the need to fill the cash crunch increases, thereby increasing the demand for working capital.  <\/p>\n\n\n\n

Account receivables is the money that an organization would get from their customers who have purchased goods or services on credit. Considered as a current asset on a company\u2019s balance sheet, account receivables is one of the most critical and a crucial aspect of working capital requirements. However, what makes it pressing is:  <\/p>\n\n\n\n

  1. A delay in accounts receivables, will lead to a cash shortage as businesses need to pay their suppliers. This further leads to borrowing from lenders like banks, NBFCs, or other informal sources, which increases the cost of capital, leading to a decrease in profit.  <\/li><\/ol>\n\n\n\n
    1. Businesses rely on income received from sales to pay off other expenses and operations of the company. However, in every industry, there\u2019s some uncertainty that the debtors will not pay their dues. It can happen if debtors are under a severe liquidity crunch. An increase in bad debts leads to difficulty in paying business expenses like salaries to employees, payments to suppliers, etc.   <\/li><\/ol>\n\n\n\n

      Here\u2019s what can happen with a mismanagement of accounts receivables: <\/strong> <\/p>\n\n\n\n

      1. Increase in working capital requirement as the funds are blocked in receivables <\/li><\/ol>\n\n\n\n
        1. Increase in cost of borrowing money in the form of term loans, overdraft, etc.  <\/li><\/ol>\n\n\n\n
          1. Cost of default because of bad debts <\/li><\/ol>\n\n\n\n
            1. Delay in account payables that can harm a firm\u2019s valuable supplier relationship  <\/li><\/ol>\n\n\n\n

              How can BFM help to address the issues of accounts receivables?<\/strong> <\/p>\n\n\n\n