medical accounts payable and receivable

Why Medical Companies Need to Automate Accounts Payable and Receivable functions?

In every business organization accounts payable and accounts receivable play an important role. The healthcare organizations are not an exception in this regard. In a healthcare firm, the main functions are obviously related to patient care. So there is always a chance of healthcare accounts receivable and healthcare accounts payable functions getting ignored. Not giving proper importance to these functions can nullify the efforts put in by the team towards offering patient care services.

In such a scenario, automating the medical accounts receivable and payable functions by using the latest technology is the best option.

The various benefits of accounts receivable automation have been discussed below:

  • Reduced outstanding payments- By using the automation option, the invoices would be prepared and delivered to clients at the right time, thus leading to quicker payments.
  • Opportunity to offer e-invoicing- Many clients ask for e-invoicing facility which can be easily offered by latest software like QuickBooks. This can help in offering better service to clients and hence enhancing the customer base.
  • Opportunity to employ staff on core functions- By automating the accounts receivable process, the medical firms with a lesser number of staff members can focus more on the core functions of the organization, thus leading to enhanced productivity and efficiency.
  • Lesser customer inquiries- As automating will ensure that invoices will reach the clients on time, your customer care employees will have to answer lesser number of customer inquiries.
  • Improved cash flow- With better management of accounts receivable, the medical firms will have better cash flow, leading to greater operational efficiency.

The various benefits of accounts payable automation have been discussed below:

  • Helpful in keeping records of payments made or missed- There is always a chance of certain payments being missed or being made twice by mistake. But with the option of paper invoicing through automation, these mistakes can be avoided.
  • Aids in availing discounts- Early payments help in availing the discounts offered by the suppliers. Automation can play an important role in this process.
  • Useful in maintaining good relationship with suppliers- By making payments at the right time, good relations with the suppliers can be maintained which is useful for the long term success of the business.

Cogneesol has emerged as a top class  provider of outsourced accounts receivable and accounts payable services to business organizations from all over the world at affordable costs. These services can help the business firms in maximizing their potential and reducing overheads. By hiring these services, focus  competencies can be prioritized and make your venture more successful. To get more information, contact us at info@cogneesol.com.
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Understanding the difference between Accounts Payable and Accounts Receivable

Before going into the difference between Accounts Payable (AP) and Accounts Receivable (AR) it will be relevant to look at what these accounting heads actually reflect.

Accounts Payable and Accounts Receivable

  • Accounts Payable – It is actually the amount that a company has to pay its vendors and suppliers for goods and services received. It is therefore treated as a liability in the books of accounts. Once payment is made, the liability is converted to expenses. Since the goods have been taken on credit for a certain period a track has to be kept of the contracted due date of payment. Large companies have thousands of such payable items and this is one reason why they prefer to outsource Accounts Payable Services. Missing a payment deadline by oversight or poor monitoring can tarnish the market reputation of the company.

  • Accounts Receivable – As the name suggests, it is amounts to be received by the company against goods and services given on credit and is therefore treated as an asset in the books of accounts. After a payment is received it is treated as an income. The company has to closely monitor the inflow of funds as payment defaults will put a stress on the cash flow and working capital requirements. This is also why firms prefer to outsource Accounts Receivable Services to specialist agencies that have the capability to recover even stubborn and long outstanding debts.

How do accounts payable and accounts receivable have a direct bearing on the health of a company?

AR is broken up by the average number of days to collect payment and DSO (Daily Sales Outstanding) is a ratio of AR to Average Sales per day.

AP is analyzed by the average time to make payment for an invoice and DPO (Daily Payment Outstanding) is a ratio of AP to the daily average of purchases or cost of goods sold per day.

Uninterrupted inflow of working capital can therefore be guaranteed by lowering DSO or hiking DPO. This is possible by outsourcing Accounts Payable Services and Accounts Receivable Services to firms that can maximize receipts and payments and keep DSO at a healthy 45 days.

What do these services have to offer-

  • Accounts Payable Services – The components of these services consist primarily of data capture that includes document storage and indexing and audit and reconciliation of invoices, electronic invoice and data processing, and incorporating mechanisms that eliminate the possibility of duplicate payments. Finally, payments too are monitored to ensure accuracy and to minimize floating costs of customers.

  • Accounts Receivable Services – By outsourcing this aspect a company stands to benefit in a number of ways. First, there is a steady recovery of receivables and cash flow and reduction of any stubborn or sticky debts. Highly experienced recovery teams help to recoup even old debts. Clients get consolidated reports and are therefore constantly in the loop on the financial position of the firm. Finally the state of the level of receivables collected and outstanding can be accessed any time from a common browser.

Hence, these are key factors in optimizing a stable financial position of a company and are therefore best outsourced.