Do you have an established and accurate accounts receivable process for your business? If not, your business could suffer from low customer satisfaction. This situation could make it easier for competitors to poach your customers and cause some debtors to de-prioritize payments. In contrast, investing in an established A/R process creates consistency and helps you optimize customer experience.
What Is an Account Receivable Process?
An accounts receivable process is the set of policies and procedures that a company uses to manage customer invoices and payments. It usually includes creating invoices, issuing them to customers, and following up on payments. Unfortunately, some companies have no established policies for handling this process. Lack of standardization can lead to discrepancies and conflicts.
The exact steps and details of the A/R process vary from company to company. However, these are the basic steps most businesses follow:
- Create an invoice.
- Issue the invoice to the customer.
- Track invoices.
- Follow up on payments.
- Collect payments.
- Write off uncollectible or bad debts.
How Can Managers Improve Accounts Receivable?
Creating uniform policies that all A/R team members follow is the first big step toward improving accounting receivable performance. By following these additional tips, you can improve your company’s accounts receivable process and create a better customer experience:
- Automate the accounts receivable process as much as possible.
- Communicate with customers often and be sure to update them on any changes to their invoice status.
- Be proactive about collecting payments and address any issues as soon as possible.
- Offer flexibility for both payment plan options and payment methods.
- Use data to improve performance by identifying areas where you can streamline the process.
- Review legal compliance guidelines regarding how you can pursue payments or recover debts from business entities vs. individual persons.
Why Does the Accounts Receivable Experience Matter?
When it comes to business operations and the customer experience, most companies focus on delivering products and services. However, how customers pay for those products and services also affects how they do business with your company and whether that experience is satisfactory.
Ideally, the goal is to create a friction-free process that gives customers many options. If you achieve this, you can expect to collect accounts receivable faster and hold on to your customers. Remember that it costs five times less to retain your customers than find new ones.
Happy customers reflect in the financial performance of the company. Retaining relations and collecting payments generate hard cash for the business. Managers can use this money to cover financial obligations and expand operations. Satisfied customers also tend to refer companies, which brings in even more customers.
What Are Some Best Practices for Improving Customer Experience?
Did you know that A/R has more customer contact than most other aspects of the business? It rivals only sales and social media marketing. Once managers keep this at the forefront of their strategizing, they will find it easier to build strong and healthy customer relationships.
You can do several things to improve the customer experience in accounts receivable. Start with these essential tips:
- Evaluate the performance of your current account receivable process.
- Set realistic goals you want your A/R team to achieve and create a plan to get there.
- Get input from your customers to ensure your strategies meets their needs.
- Use customer data to improve your invoicing and payment processes.
- Automate as much of your A/R process as possible.
- Communicate regularly with customers about their invoices and payments.
- Focus more on rewarding customers for good payment behavior.
Why Is Payment Flexibility So Important?
When customers control when and how they pay you, you have a much higher chance of getting paid on time. That’s because customers get to choose what works for their schedules and budgets. Consider these options:
- Customer portal options to automate payments
- Online, physical, and in-person payment options
- Installment plans for struggling companies
- The ability to choose the day of the month that bills become due
How Does Accounts Receivable Process Automation Help?
One of the best ways to improve customer experience in accounts receivable is to automate as much of the process as possible. This includes automating invoicing, issuing payments, and following up on delinquent accounts.
Accounts receivable automation frees up your team’s time so they can focus on more critical tasks, such as personalized relationship management. Automation can get the ball going, but it takes real people to build strong connections.
Consequently, by automating your A/R process, you can improve efficiency, communication, and overall satisfaction levels. Your customers will appreciate the streamlined process and improved communication, and you’ll reap the benefits of a more efficient accounts receivable department.
Do these sound like the kinds of benefits you want to reap for your business? Book your free demo with Gaviti today.