The sales ledger needs a robust process in place. Without one, weaknesses and inaccuracies can start to creep in. One or two minor errors won’t necessarily throw your accounting department and business off balance. But, if left unchecked, these can really add up. You’ll want to ensure it’s being managed properly, this guide reveals the common pitfalls and how your business can avoid them.
Not keeping up to date
This is one of the biggest mistakes a business can make with regards to their sales ledger and overall accounting function. This is because without sufficient recording of what is owed to your business, you will be unable to monitor or process the retrieval of money that’s owed. This could create cash flow problems, and if you’re looking to grow your business, will negatively impact your ability to do so if you don’t have full visibility or good management of your cash flow.
Oversights and absent transactions
If anything is not added to the ledger in the first place, this will make it difficult to trace. Having a rigorous process in place that ensures all invoices and transactions are recorded correctly is crucial. It’s up to you what process you put in place, but ensuring that everything is dealt with in a timely and efficient manner will help. Making sure that your accounting team is familiar with your procedures and taking on board new suggestions to help minimise human error will also help.
Not chasing up payments effectively
The chasing up of payments should have a standard operating procedure. This should detail timeframes on when and how to communicate, but also when to escalate communications. With a sales ledger and management account, you can see the amount that’s owed by certain clients or customers and if this goes over a certain threshold your team can effectively prioritise and take necessary action to retrieve the money that’s owed.
Chasing customers that have already paid
It can be surprising how many businesses chase customers for payments that have already been received. Again, having a robust procedure in place can make all the difference. If this happens regularly this can cause unnecessary annoyance for your customers. Ensuring that your accounting team knows how and where to record this information and to double check payments haven’t already been made before chasing customers can help reduce this.
Want help setting up and managing a sales ledger?
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