Four reasons to regularly review your sales ledger
The sales ledger is one of the most important assets a business has.
Much more than a place to document your business’s sales and outstanding invoices, it offers an incredible insight into your business performance when used right.
But how often do you review your sales ledger? Every day? Twice a week? Less? There are a number of reasons why you should always have one eye on it.
1. Improve your cash flow forecasting
Cash flow management can take many different guises. It’s not just your cash flow forecasts that will reveal any upcoming shortfalls – your sales ledger often holds the key to being able to nip any problems in the bud quickly. By maintaining a regular and thorough check of your sales ledger, cash flow forecasting can be done more accurately and in turn gives you the insight and time to effectively plan ahead in order to reduce the impact this will have.
2. Gain an accurate perspective of the effectiveness of your credit management
By showing which invoices have and haven’t been paid, the sales ledger provides an instant overview of the success of your company’s credit management processes. Should a high proportion of invoices be unpaid beyond the agreed terms, it could be time to focus on how to improve this aspect of your business and consider new strategies to implement. Here are 10 common invoicing mistakes that businesses make.
3. Identify problem invoices
Your sales ledger will tell you which invoices are overdue. Use this information to target those customers to understand why payment hasn’t been made and work with them to resolve any disputes. Should your efforts be in vain or consuming too much time, don’t just give up. A debt collection agency can bring vital expertise to the process to help you recover the monies owed – often for a success-only fee. Get a quick quote to see what we would charge to recover your overdue invoices.
4. Recognise the time for new funding
Should you anticipate a cash flow shortfall, this can be countered by securing additional funding. Whilst extending an overdraft or obtaining a bank loan can be quick wins with the bank should you enjoy a strong relationship, arguably a more suitable option would be invoice finance. By releasing up to 90% of your sales ledger value just 24 hours after invoices are raised, this removes the cash flow gap between a sale and payment entirely and provides the cash required to pay suppliers on time and meet your other commitments.
Many businesses fail to review their sales ledger performance on a regular basis. Don’t let this be you.
For more information on how we can help you to optimise your sales ledger, call our team on 0800 9774848 or email firstname.lastname@example.org.