Accounts receivable management, it seems very easy and yet many organizations are not in control for various reasons. We therefore discuss 6 areas that are essential for proper accounts receivable management.
Keep your administration up-to-date
A healthy accounts receivable administration starts with an up-to-date administration. That sounds obvious and yet we see that it is still not the case for many companies. Up-to-date means that invoices are timely sent and that bank statements are processed daily. The longer you wait with invoicing, the more likely it is that the customer will also pay later and without processing the bank statements, you will not know for which invoices you should take action.
Differentiate; not every customer is the same
Customers are just like people, meaning not every customer is the same. At most companies major customers are treated differently than one time customers. This also applies to consumers and business customers or customers who routinely pay late. Segmenting customers aims to differentiate the way customers are approached. For example, a key account receives a monthly statement of account for reconciling the outstanding invoices where a small customer, with a bad payment history, receives a phone call on the due date.
Resolve disputes quickly
One of the most common reasons for not paying an invoice is a dispute. This may be due to a complaint, but can also be caused by an incorrect invoice. If you want the customer to pay, you will have to resolve the dispute and the faster you do the better. For you and the customer experience.
Disputes can sometimes be prevented, for example by sending a copy of the invoice with a reminder because not knowing the invoice is often used as an excuse for not paying it.
Act on deadlines
It makes a lot of sense; if a payment term is missed, you take action. The reality however is often different. This is due to a lack of time and control, but consider the signal you give by not following up on appointments. When dealing with a dispute or complaint, a customer will question the quality of you as a supplier. In the event of non-compliance with payment agreements, a customer priorities suppliers that make the most noise.
Use specialized software
Of course, this point about software argues for our own products, but we also sincerely believe you can’t do without it. At least not if you go for both efficient and effective accounts receivable management. In short, specialized accounts receivable management software enables you to:
- Send reminders in a single click.
- Manage disputes.
- Manage payment plans.
- Apply customer profiles.
- Gain more insight and in the end control.
Communication and the right people
All the above points are important, but people are still an essential part of successful accounts receivable management for most companies. Why? Because processes and software only respond to the situation and arguments of a customer to a limited extent. The right employees are therefore indispensable. They should be sensitive, have great communication skills, know the internal and legal processes and are also administratively skilled. They are a centipede, because accounts receivable management affects many areas of business operations.
Communication is essential part of accounts receivable management, both by people and systems. You can read more about this in our post about communicating with customer.
Do you have any additions on this post? We would like to hear from you and who knows, it may inspire new features for our software. You can mail us at firstname.lastname@example.org.