Introduction: Fundamentals of Cash Flow Management
The viability of any business depends on the proper management of cash flow. Efficient management of accounts payable (what you owe) and accounts receivable (what is owed to you) is the cornerstone of financial stability. In Georgia, many companies face liquidity problems not because they have a bad business, but because they fail to collect funds from clients on time or balance their payment schedules. Professional accounts payable and receivable services help businesses maintain a healthy balance sheet, avoid "cash gaps," and maintain good relationships with suppliers and clients. This service is essential for trading and distribution companies as well as service providers.
What Does This Service Cover?
This service covers the full cycle of recording and managing liabilities and claims. Specialists ensure:
- Accounts Receivable Management (AR): Timely sending of invoices, monitoring payment deadlines, reacting to overdue payments, and managing the reminder system.
- Accounts Payable Management (AP): Processing invoices received from suppliers, planning payments according to priorities, and optimizing payment terms.
- Reconciliation Acts: Periodic reconciliations with partners (suppliers and clients) to confirm the accuracy of balances.
- Aging Analysis: Classifying liabilities and claims by due dates so management can see problematic debts in time.
- Credit Policy Development: Defining payment terms for clients (credit limits, deferral days) taking risks into account.
Common Situations and Scenarios
A typical scenario is when a company has profit on paper but no money in the account to pay salaries because clients are late with payments. A professional accountant organizes receivables management and accelerates fund collection. A second scenario involves relationships with suppliers: if a company systematically delays payments due to chaotic management, the supplier may stop supplying products, which will halt the business. Disputes over balances are also common—when your records show a client owes 1000 GEL, but they claim it is 500 GEL. Regular reconciliation acts and complete documentation order rule out such misunderstandings.
Georgian Legal Framework
Settlement issues are regulated by the Civil Code of Georgia, which defines the rules for fulfilling obligations, deadlines, and conditions for imposing penalties in case of violation. From a tax perspective, the Tax Code of Georgia (especially regarding VAT) requires accurate accounting, as when working on an accrual basis, tax liability may arise even before funds are received. Consequently, proper management of accounts receivable is directly linked to tax burden planning. Also, the "Law on Accounting, Reporting and Auditing" obliges companies to maintain accurate and transparent records of their liabilities and assets.
Process: How is Management Conducted?
The service process begins with an audit of the existing base—specialists check who owes the company and how much, and vice versa. Then a systematic process is implemented: bank statements are processed and reflected in the software daily. Once a week or month, management is provided with an "aging report" showing overdue amounts. Specialists also prepare and send reconciliation acts. Communication is critical—the accountant or financial manager coordinates with the sales department (for receivables) and the purchasing department (for payables) to ensure information is continuous and accurate.
Why Choose a Specialist on Legal.ge?
Accountants and financial managers presented on Legal.ge possess modern accounting software skills (Fina, Oris, 1C, QuickBooks) and practical experience in cash flow management. Through our platform, you can find a specialist who not only records data but also helps you establish financial discipline. Organize your accounts payable and receivable with Legal.ge specialists and ensure the financial stability of your business.
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