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Signature service accounts receivable purchase agreement

in today's video we are going to learn about accounts receivable process let's look at the definition of account receivable like what is account receivable account receivables are created when a company lets a buyer to purchase their goods or services on credit if a company has receivables then they have made a sale but have not yet collected the money from the purchaser so account receivable refers to the outstanding invoices a company has or the money clients or the company the phrase refers to accounts a business has the right to receive because it has delivered a product or service what we will learn in account receivable process we will learn the establishing how we can establish a credit practice if we are going to lend money to someone or we are going to sell our product on credit what will be the terms of payments what we need to negotiate what information do we require from the company like we are going to give them the goods on credit so next we will see the invoicing how to make invoices after that we will see the tracking payments how to track the payments i will show you the examples also how you can track the payments on timely after that we will see how to optimize of account receivable process how we can make our account receivable process efficient and we will discuss the daily routine of account receivable professional in a company if account receivable professional is working in one company so how he spent his day so let's start with establishing a credit practice this is the first phase of the process of account receivable deciding on the amount of credit you want to extend to each customer choosing the payment time period for your customer like when your customer will pay back you like after 30 days after 60 days after 90 days after 15 days whatever will be the terms you need to mention those terms after that deciding if you want to offer early payment discounts and what those terms would be if you offer them early payment discount so your clients will pay you early or not you need to decide on it picking a penalty for late payments that you receive from customers and identifying any other conditions specific to your small business that you want to include let's look at the example of credit facility form which we need to create to decide on the terms of payments like this is a credit account agreement when we are going to give our products own account we are creating or making this type of form like here the company name to whom we are going to lend them our goods so their registration number and their coc number we they need to write here year of business how long they are in business their address their phone number fax email and the nature of business they are doing okay the general manager name accountant name and their phone numbers estimated monthly purchase of material how much they will purchase from us monthly so authorized signature is to sign on your purchase order when they will issue a purchase order so we need to verify the signatures who sign that purchase order so we can deliver the goods so here we need to mention the note addition or deletion to above listed authorized signature easy should be notified to company name here to us if we are giving the goods on credit so here our name comes failure to do so we release of any responsibility arising out of accepting the purchase order we will not accept any purchase order if these two signatures will not match on the purchase order so owner name of the company if there are shareholders they can put the name and the number percentage of share and their nationality bank reference which bank they are dealing their phone number their account number and here it is agreed you can put here some terms like it is agreed and understood by the applicant that if company name our company name like provides limited trade credit to the applicant he shall make payment within 30 days if we are delivering a good and submitting of our invoice and after submitting our invoice they have 30 days to pay us so these are the terms and the credit facility form they should make it chamber stamp like the government stamp of any authority like if you are in pakistan saudi arabia india anywhere you should have a legal stamp here so if the company will not going to pay you you can sue okay you can write here the requirements what the documents are required here are some documents like please provide a letter of introduction from your banker and latest financial statement to see the liquidity of the firm and article of association commercial registration copy chamber of commerce and the location map and paying office so this is for our use for our company use so here we can write the comments and approvals for this credit you know credit agreement so this is the credit facility form which we need to consider before we are going to deliver any type of goods on credit so the next is invoicing invoicing an invoice is a document provided to the buyer detailing the products and services that have been rendered the cost of those products and services as well expected payment date should be mentioned on the invoice all invoices have customer name purchase order number and the credit terms like net 30 or 60 days each invoice has to have a unique invoice number for easy retrial each invoice has payment transaction instruction and bank details also you need to mention your bank details on the invoice so it is easier for the buyer after 30 days he can see the bank details on your invoice and they can pay on time invoice must be issued with original stamp and signature should be the invoice should be stamped for your company stamp and signed by an authorized person let's have a look an example of an invoice this is the invoice format like here your company name date of the invoice the issue date invoice number this is very important this is the reference number of the invoice purchase order number of the client and the contract number of the client also here the address phone number fax and email and word number for our company who is giving the products on credit who is issuing this invoice so we are going to bill to the other company who is getting loan from us or getting goods on credit their address their contact details their tax number and attention to who so after that the invoice should contain a serial number description of the product one two three four five whatever the detail of the products you need to mention here the quantity of the product and the unit price and the total amount after that subtotal tax and the grand total amount in words you should mention here your bank details name bank number uh account number ibn branch address whatever so you should mention here the terms payment should be cash check or bank deposit to our mentioned account prepared by a sign and stamp here so this is the invoice format when you are going to sell your goods on credits you should prepare an invoice like this and send to the customer you can send this invoice originally and you can send this invoice by email the next is tracking payments how to track payment this is also the third phase of the account receivable process tracking payments this step is performed by an account receivable officer the officer also reconciles the account receivable result to be certain that all the payments are accounted for and properly post it and then issues monthly statement to clients the statement provides details for the customers about the amounts out as per previously sent invoices the tracking process differs in large and small companies smaller companies may not have an advanced system in place to track payments and may use manual account receivable tracking by using tools such as excel in a manual process companies use spreadsheets to record when they send the invoice and when they receive payments so small companies also may not have enough staff to appoint an account receivable officer in which the company may hire a professional accountant to fulfill this function let's look at the receivable aging report for the tracking of payments this is a receivable aging analysis report like serial number client client one two three four five whatever the client's name will come here invoice number our invoice number which we have submitted to this client the purchase purchaser order number of the client and the due date of the invoice here you need to put here the due date of the invoice the amount of the invoice and after that the formula which shows automatically how much days outstanding this invoice so this is delayed 637 days this invoice from this client and not yet due if there is any invoice which is not yet due this amount will comes here if the invoice in between 0 to 30 days delayed so this invoice will come here the amount will come here if 31 to 60 days delay the amount will show here if 61 to 90 days delay then amount will show here if more than 90 days delayed so the amount will come here as you can see here more than 90 days outstanding so this is showing here this is also more than 90 days all of these are more than 90 days delayed so all our amounts are here showing under the over 90 days delayed so net duo amount is here total so you need to track this is the way of tracking the receivables so when you see any client is to you you can contact them and you can track your payments with them now let's talk about optimizing your account receivable process how to optimize how to make efficient account receivable process discuss payment terms early with each customer before you deliver them the goods on credit you should know the payment terms use electronic payments early in the process keep your customer data accurate and up to date always look for ways to enhance and improve your collection process one way to do this is by using electronic billing always follow up early with your debtors before the invoice due date comes so let's look at now a day in the life of an account receivable professional so what an account receivable officer is doing whole day of his job a typical day for an account receivable officer would involve activities such as verification of credits data classifying the debts and making journal entries for the transactions the account receivable officer also oversees a team of clerks analysts and accountants in addition to debt collectors each day the officer ensures that the team is working in collaboration to ensure success of the established account receivable process for instance a customer may request to purchase goods on credit the account receivable manager would require the credit analyst to identify credit worthiness of the customer the manager will ask the credit analyst to tell me what is the credit terms with this customer and is he eligible that he can get more credit or his limit is expired the manager would ensure that once the customer was identified as credit worthy that the invoices would be prepared by the accounters ebay clerk and issue in time if a customer is credit worthy then we can deliver them the goods on credit otherwise we will not deliver them any good or we will not issue any invoice next the accountants would determine the total credit sales for the day the information is then passed to the debt collectors including the due date for money collection so this is the routine of account receivable professional and this is the whole process of account receivable so guys i hope you understand what i have to convey you and i hope you like our today's video please do subscribe our channel so it will keep motivating us to create more videos for you thank you very much and goodbye