• Home
  • Contact Us
iBusiness Angel
No Result
View All Result
Saturday, September 23, 2023
  • Home
  • Finance
  • Accounting
  • Sales
  • Business
  • Marketing
  • Home
  • Finance
  • Accounting
  • Sales
  • Business
  • Marketing
No Result
View All Result
No Result
View All Result
Home Finance

Deductions in Accounts Receivable Process: What You Need to Know

by Harold Washington
November 1, 2021
in Finance
0
Deductions in Accounts Receivable Process: What You Need to Know
165
SHARES
2.1k
VIEWS
Share on FacebookShare on Twitter

A small business owner may use accounting software to record their financials. Quarterly or annually, their account can download the necessary reports to file the tax returns, employee taxes, and other filings. This process is beneficial for an operation that can’t afford a full-time accounting team.

As a rule, the person handling the accounts receivable process shouldn’t be the same person doing the accounts payable. The separation of duties is to create a check and balance system. 

Whether one person is doing all the accounting or two people, you need someone who understands a deductible and how to record it.

Are you looking to learn what falls under accounts receivable? Keep reading for a quick guide on where to start.

Understanding the Accounts Receivable Process

In their simplest terms, accounts receivable are the money your company receives for the product or services you sell to customers. To turn a profit, your receivables must exceed your payables.

When it comes to accounts receivable deductions, you want to keep them at a minimum. To some, these deductions are the cost of doing business. In reality, not keeping an eye on deductions can end up being costly to your company.

What Are Accounts Receivable Deductions?

Accounts receivable deductions are expenses that detract from your profits on sales. You can either lose money on the sale, or you can take a complete loss.

Examples include refunds and discounts due to defective products or the client simply changed their mind. You can incur a deduction if there is an error in billing and the client is undercharged. The opposite can also happen when a client receives an incorrect order and refuses to return the excess items.

There are three basic negative deductions:

  • Intentional
  • Preventable
  • Unauthorized

You can also have AR deductions when you mark down items or have a sale. These deductions are not negatives, but that is commonplace in business.

How to Avoid Deductions

The best way to avoid deductions is to analyze your business sales practices. Look for ways to improve your products or services to reduce complaints or returns. 

You do this by investing in deduction management. This process involves putting together a project management team that will go over your records, processes, and other data to note trends that lead to deductions.

Next, they will come up with solutions to help combat the issue. The solutions can range from outside audits to automation software that helps track transactions.

For example, instead of manually creating invoices, you can utilize software that only requires quantity. Everything else is pre-populated. 

Reaching Your Bottom Line

The accounts receivable process, when it comes to deductions, is pretty straightforward. The goal is to reduce or eliminate preventable losses in revenue. Dispute resolution, deduction management, and accounts receivable software are three investments you should consider today.

We hope you found this information helpful. Continue to browse our site for more accounting and business tips.

Harold Washington
Harold Washington
Please login to join discussion
No Result
View All Result

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019

Categories

  • Accounting
  • Auto
  • Business
  • Coworking space
  • Featured
  • Finance
  • Human Resource
  • Industrial Fume Extractors
  • Industry
  • Investment
  • Laboratory
  • Law
  • Legal
  • Manufacturer
  • Marketing
  • Real Estate
  • Sales
  • Tech

Recent Post

Steps To Request A Quote For A Charter Bus In Chicago

Steps To Request A Quote For A Charter Bus In Chicago

September 23, 2023
Tripple Stabbing on Lonsdale Street

Tripple Stabbing on Lonsdale Street

September 19, 2023
Unlocking the Secrets the Popularity of SkillsFuture Courses in Singapore   

Unlocking the Secrets the Popularity of SkillsFuture Courses in Singapore   

September 16, 2023
Hospital Performance

4 Advantages of Behavioral Health Partnerships for Hospital Performance

September 15, 2023
Pick the Right Attorney

How to Pick the Right Attorney: 5 Tips You Can’t Ignore

September 15, 2023

Advertisement

Recent Post

Steps To Request A Quote For A Charter Bus In Chicago

Steps To Request A Quote For A Charter Bus In Chicago

September 23, 2023
Tripple Stabbing on Lonsdale Street

Tripple Stabbing on Lonsdale Street

September 19, 2023
Unlocking the Secrets the Popularity of SkillsFuture Courses in Singapore   

Unlocking the Secrets the Popularity of SkillsFuture Courses in Singapore   

September 16, 2023

Quick Link

  • Contact Us
  • Finance
  • Accounting
  • Sales
  • Business
  • Marketing

Featured

Copyright © 2023 ibusinessangel.com | All Right Reserved .

No Result
View All Result
  • Home
  • Finance
  • Accounting
  • Sales
  • Business
  • Marketing

Copyright © 2023 ibusinessangel.com | All Right Reserved .

Login to your account below

Forgotten Password?

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In