Andrew Stain author of the Keep It Simple series answers his readers’ questions.

One reader asks – I have been reading one of your guides and wonder why you place so much emphasis on accounts receivable – can you comment please?
Accounts Receivable are often the lifeblood and the oxygen that a company needs to survive.

Making a sale is always good and rewarding however getting paid for that sale is much more rewarding as it provides the appropriate finance to build your business. Many people ignore their Accounts Receivable assuming that they will take care of themselves – in other words that customers will pay them in a regular and timely manner. There might have been a time in history when that was true however today that is rarely the case.
If business owners do not communicate well with their customers especially on the subject of paying for supplies, then their business will suffer. Accounts Receivable are a valuable asset and must be managed well in order that the company can survive and grow.
Accounts Receivable also represent a valuable financing tool for many entrepreneurs and again if the receivables are not in good order then that diminishes their value from a financing point of view.
Management of Accounts Receivable is definitely an essential management function that needs to be addressed on a daily basis.