How to Create Invoices and Monitor Accounts Receivable
When you run a business, you need to know how much money you are owed and the money needs to be paid in a timely manner. Without efficient bookkeeping tools, some of your accounts could fall through the cracks or your income and expense reports could be inaccurate. By creating protocols for billing customers and tracking payments, you will always know where your business stands financially. Whether you use accounting software or have your own system, accuracy is essential.
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Instructions
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Purchase an accounting program such as QuickBooks or Peachtree and install it on your computer if you don’t already have this software. An accounting program has pre-configured fields and categories, so all you need to do is type in your customers’ names and account details. If you don’t have accounting software, you'll need to create invoices and accounts receivable records from scratch, which might be acceptable for a very small company or a freelancer.
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Enter a purchase or contract into your invoicing system as soon as you finalize the terms with your customer. Whether you opt to do it on your computer or manually, creating an invoice is an essential step. The invoice is a reminder to the customer of what he owes and when payment is due.
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Number each invoice so you can easily track orders from start to finish. Invoices are typically numbered in sequential order for convenience. Remember to include the purchase price for goods and services as well as the due date on the invoice. Some invoices also include a description of goods and services, especially if you are using an automated program.
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Enter the invoice details into your accounting program or spreadsheet if you have these tools available. It's important to keep track of the goods or services you sell, the customer's name, the invoice number, the purchase price and the payment due date as part of an accounts receivable system. Each detail should be entered into its own column on a spreadsheet, or if you are using an accounting program, type the information into the applicable fields.
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Track your receivables by sorting the invoice numbers by due date. That way, you can easily see what is upcoming and due soon. As invoices are paid in full, mark them as completed contracts in your accounts receivable. By moving completed contracts out of your active file, you will have a simple way to monitor outstanding accounts receivable.
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References
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