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Delhi, India, 2011/06/07 - Key topics covered: Expert Column- Do Accounts Receivable Statements really help in improving Collections, Study and Surveys- Finance and Accounting Outsourcing Trends 2011, Software Review- New Features and Reports in QuickBooks 2011.
Article 1: Expert’s Column
Do Accounts Receivable Statements really help in improving Collections!!
Sending AR statements is a standard accounting practice followed by many companies. However sending AR statements cost, time and effort while in many cases not yielding any tangible benefit depending on the size of the organizations. Large organizations may not provide statements unless requested and feel that it is just a waste of paper with little impact on collections while a small business may find statements very handy. It is easy to misplace invoices since small business procedures are not as well developed as in larger organizations.
Let’s briefly analyze the pros and cons of sending AR Statements and you could decide whether it is important or not to have it as a part of your accounting procedure.
- AR statements are the financial tool of communication with the customers. While most clients pay only from invoices, statements are a real reminder especially to those clients that know that they are sitting on your working capital;
- Helps in reconciliation and resolving issues with customers on documentations faster;
- Statements are reminders of outstanding amounts and give the customer a chance to challenge incorrect charges to their account that they would otherwise not be aware of. This helps in building customer relations;
- Sending AR statements also helps you calibrate your move to more aggressive collection efforts. Otherwise, you allow your customers the excuse of simply explaining,"Well, I never received your invoice.";
- Sending A/R Statements could help uncover a fraud scheme.
- Many large organizations believe that sending AR Statement is just a waste of paper (and postage) with little impact on collections;
- Some accounts that do request statements are more interested in finding old credits they can apply rather than worrying about what is due or past due;
- Some believe that rather than sending statements, the more effective option may be to personally contact the customer on specific over-due invoices. This can be done by phone, email or automated electronic email delivery;
- There are utility programs that will monitor your data and send out automatic email reminders to your customers based on days outstanding. Unlike AR statements, no postage, labor or human action is needed in this method.
The key to efficient collections is to know how your customer pays- do they require copies of receipt docs and POs or maybe a proof of delivery document. Each office has their own processes and idiosyncrasies that A/R personnel need to understand and work around. The faster you provide what they need the faster you get paid. This may require phone calls to smooth the way like a follow-up to ensure they have everything they need and that it’s entered in the system. If you are currently providing statements, you might try not sending them for a month to see if anyone notices or cares. In sum, the value of statements depends on your situation and customers.
Article 2: Study and Surveys
Finance and Accounting Outsourcing Trends 2011
2011 can be marked as the beginning of the New Year for finance and accounting outsourcing. Global economy is slowly and steadily recovering from one of the worst recessions experienced in the last 50 years. Organizations are looking at ways to reduce the costs and be competitive in the market in the coming years. To recover from the situation companies are increasingly looking at finance and accounting outsourcing.
Facts and Figures
- Research carried out by an independent research organization showed strong growth in business process outsourcing (BPO). It found BPO service sales in the first three months of 2011 were 65% higher than those in the same period a year ago.
- The opportunity of finance and accounting outsourcing equals approximately US $150 to $200 billion.
- In 2010, the industries that mainly turned to finance and accounting outsourcing were manufacturing, retail, financial services, travel and logistics. These segments accounted for roughly 70 to 75% percent of the total spending last year. The industries seeing attraction in 2011 include real estate/property management firms, medical, banking and IT Firms.
- Outsourced Accounting processes commonly requested in 2010 were payroll, accounts receivable and accounts payable outsourcing processes. Emerging process trends in finance and accounting outsourcing are financial planning and analysis.
Demand for Outsourcing Accounting is still considerable
There are still many untapped finance and accounting outsourcing opportunity areas, a recent study estimates that there are fewer than 800 live engagements and only one-in-six enterprises outsourcing transactional accounting activities to a third party service provider.
Recovering economy rekindles outsourcing motives
The F&A BPO market was at its peak between 2004 to 2008; interest cooled during the recession as enterprises focused on shorter-term survival measures and put change initiatives, such as BPO, on the backburner. However, with recovery under way, many businesses are refocusing attention on global outsourcing opportunities as a means to reduce operating cost. Studies estimates that, more enterprises are now intending to move into an F&A BPO model over the next year, with strong motivation coming from mid-market organizations.
More evolved Finance and Accounting deals
A key trend seen today is that a number of clients who have already entered the finance and accounting outsourcing space are now moving beyond traditional outsourcing areas and practices. Their previous experience has been an invaluable learning ground. They are more aware of what to do, and more importantly, what not to do. As a result, they are focusing on setting up a far more evolved outsource environment.
Contract renewals and expansion
Another major study highlights the significance of FAO. The growth in 2010 was not purely a function of new contracts. Nearly 55% of the Annual Contract Value growth in 2010 was contributed by contract renewals and expansion.
Trends in finance and accounting outsourcing are changing considerably as both outsourcing service providers and clients are moving towards higher expectations and demands for outsourced services. These changing trends will certainly offer new opportunities for professional finance and accounting outsourcing service providers in 2011. It seems very likely that these trends will ultimately result in an increasingly competitive, mature and sophisticated outsourcing market.
Article 3: Software Review
New Features and Reports in QuickBooks 2011
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