The start of a new year means new opportunities for your business to improve, and one area that is often overlooked is your company’s accounts receivable process. While your company may do a good job collecting the money that is owed to you, the time it takes to collect along with the effort you have to put in can greatly impact your company’s efficiency. This is why many companies consider using third party partners to take care of their accounts receivable process.
Already have an accounts receivable process in place that you want to improve? Cut down on time, costs, and effort by learning how to improve collection of accounts receivable with these top tips for 2023:
Suggestion #1: Incentivize your customers to pay sooner
Many people are procrastinators, and will often wait until the last second to make their payments without any reminders. Looking to collect your payments sooner rather than later? Offer some kind of incentive or reinforcement for early invoice payments. A positive incentive might be reduced fees, priority customer support status, or some other personalized gift or incentive you can offer to those who make their payments early.
Alternatively, you can use negative incentives to get customers to pay sooner, such as charging interest or preventing the use of services if payments aren’t made by a specific date. Be warned that using negative incentives may harm relationships with otherwise friendly customers. Positive reinforcement is highly recommended before resorting to negative incentives.
Suggestion #2: Make the payment process easy
The fewer steps that someone else will have to follow to make their payments, the more likely it is they’ll actually do it instead of putting it off until they have more time. Ergo, do everything you can to try and make the payment process easy and repetitive. A few suggestions include:
- Automatic billing and payment collection
- A direct payment link in your invoice
- Simplifying bill payment login pages
- Multiple convenient payment options
- Link to customer support to help with payments
Suggestion #3: Eliminate accounts receivable inefficiencies for your team
Similarly to the last point, simplifying and improving the accounts receivable workflow for your team will save your time, money, and energy. There are many simple and repetitive tasks that can be performed by automated programs. Find the right service that can do the simple things so that your team can focus on more complicated or fulfilling tasks, boosting morale and productivity in your company.
Some simple and common tasks that you should consider handing off to another service perform through automation include:
- Updating customer profiles when they submit changes
- Sending regular payment reminders and invoices
- Recording payments received and paid outgoing invoices
- Onboarding and scheduling regular training for your accounts receivable team
- Tracking time, expenses, and other needs for your accounts receivable staff
Remember that there is always a chance that automation or outside services can fail. To maintain a reliable accounts receivable process, make sure you have a system in place to verify the work that is done through automation and outside services.
Suggestion #4: Standardize the accounts receivable process as much as possible
While people typically enjoy being tailored to many areas of their life, making payments and dealing with the accounts receivable process isn’t one of those areas. Instead, they want it to be as simple, straightforward, and repetitive as possible. That way, if something goes wrong or they encounter something unexpected, they can find a solution easily or ask around to find out how to best resolve their issue.
Standardize tasks and the accounts receivable process as much as possible. Some standardization recommendations include:
- Clear and concise credit policies that are the same for everyone
- Regular monthly collection that happens on the same date for everyone
- The same payment portal for all of your partners and customers
- A publicly posted FAQ that answers common questions and concerns
Suggestion #5: Reach out to your customers and ask how to improve
Looking for even more accounts receivable process improvement ideas? Then go directly to the customers who have to interact with your process and find out what they think. You can leave a link to a survey after a payment is made asking for feedback, or send out an email periodically inviting your customers and partners to share their thoughts. The customer experience will often help you identify issues with the accounts receivable process that you can’t spot from your end.
Suggestion #6: Introduce redundancies and monitoring to your accounts receivable workflow
This suggestion combines several of the tips we mentioned above. Whether it’s an automated task or something manually performed by your workers, it is vital that you have a system in place that will allow you to easily monitor and verify the work being done. After all, work done correctly the first time is always more efficient than work that has to be repeated because it was done incorrectly.
Some ways you can introduce work monitoring and verification include:
- Invoice generation and forwarding upon receiving payments
- Daily task reminders and checklists to sign off as work gets done
- Periodic work reviews to check in with your team and find out how they feel
- Time clock management systems that encourage certain tasks throughout the day
- Repeating messages to remind employees and customers to provide accurate data
Suggestion #7: Make your team and customers feel appreciated
Our last suggestion is also one of the most important. If you want to improve your accounts receivable process, remind everyone involved how valuable they are to your company. Not only will your encouragement help make the accounts receivable process as smooth as possible, but you’ll help them in other ways. Whether it be a simple thank you note or a small gift, there’s nothing better in life than going out of your way to help someone feel appreciated.
Get professional help for your accounts receivable process from Gaviti
Following our suggestions above will greatly improve the accounts receivable process for your company, but it may also be a bit overwhelming if you don’t have a solid process in place. Looking for a new or superior collections platform? Then consider reaching out to our team here at Gaviti.
Gaviti is a collections platform designed for easy integration with your company, reducing DSO so you can maintain a high cash flow for your company while reducing the need for reserves and write-offs. We take care of many of the cumbersome and difficult manual collection tasks, helping a wide range of businesses with A/R optimization. Some of our partners include major companies in manufacturing, technology, wholesale distribution, and other business services.