Managing creditors in your software involves maintaining accurate data, communicating with creditors and other stakeholders, invoices, payments, corrections, reconciliations, and reports. In this article, we will discuss these six aspects of managing creditors.
To maintain accurate data, the practice should regularly review and update creditor information, including contact details, payment terms, and banking information. It is also essential to ensure that data is secure and protected from unauthorised access.
Here are some reasons why it is important to maintain creditors' data:
- Effective communication: Maintaining accurate contact information for creditors ensures that the healthcare practice can communicate with them effectively. This is important when resolving disputes, requesting additional information, or negotiating payment terms.
- Avoiding late payments: Accurate creditor data allows the healthcare practice to prioritise payments and avoid late fees or penalties. This is especially important when dealing with critical suppliers who provide goods or services that are essential for the practice's operation.
- Forecasting cash flow: Accurate creditor data provides the healthcare practice insight into future cash flows. This information is essential for forecasting and planning, allowing the practice to manage its financial resources effectively.
- Building relationships: Maintaining accurate creditor data helps build strong relationships with suppliers. By paying on time, communicating effectively, and keeping accurate records, the practice can build trust with creditors and establish long-term relationships.
- Compliance: Maintaining accurate creditor data is essential for complying with legal and regulatory requirements. For example, healthcare practices must maintain accurate records of all supplier transactions, including invoices and payments.
Once creditor data has been captured in the practice management software, users can quickly and effectively communicate electronically with a creditor via SMS or email. All communication is logged in the software, which makes it possible for different users to follow up on any communication between the practice and the creditor.
Creditors invoices and corrections
Creditors invoices are documents that detail the goods or services provided, the amount owed, and the payment terms. It is crucial to ensure that invoices are accurate, and the practice has received the goods or services before making payments. The creditor clerk should review invoices for accuracy and ensure they meet the agreed-upon payment terms.
Errors can occur in invoices, and it is essential to correct them promptly. Failing to correct errors can result in additional fees and the loss of the opportunity to ensure that no financial losses occur.
Payments and corrections
Paying creditors is a crucial aspect of managing creditors. To ensure that payments are made accurately and on time, all invoices should be captured timely in the software.
It is also essential to ensure that payments are made securely, and that the practice's financial information is protected from unauthorised access. The practice should use secure payment methods, such as online banking, and regularly review financial records to ensure that payments are recorded accurately.
Reconciling creditors' accounts involves matching payments to invoices received and ensuring that the balance owed is accurate. It is essential to reconcile creditors' accounts regularly to avoid discrepancies and errors. The process involves reviewing invoices and payment records and ensuring they match up.
The practice should develop a reconciliation process that ensures all payments are recorded accurately and promptly. It is also essential to communicate with creditors to resolve any discrepancies promptly.
Reports and internal controls
Generating reports is essential to obtain an overview of creditor data, invoices, reconciliations, corrections, and payments. They can help management identify trends, highlight areas for improvement, and provide insights into the practice's financial position.
The practice should develop a system for generating reports regularly. Reports should be pre-configured so that:
- Report settings don’t change from one set of reports to the next. This will ensure that the available data can be analysed and compared by management.
- All information that management requires will be visible on the reports.
Reports should also be reviewed by relevant parties, such as accountants or financial advisors, to ensure accuracy.
In summary, managing creditors involves maintaining accurate data, communicating with creditors and other stakeholders, invoices, payments, corrections, reconciliations, and reports. Businesses should develop systems and processes to ensure that each aspect is managed effectively. By managing creditors effectively and by means of practice management software, the healthcare practice can maintain a healthy financial position, avoid late payments and fees, and build strong relationships with creditors.