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Accounts Receivable Management for Service Businesses

Accounts receivable (A/R) optimization is an ongoing goal for every company. The quicker and more efficiently you can process payments, the better off you’ll be. This applies to business service providers as much as providers of physical goods. And in some ways, it’s even more important. Service-based arrangements can make it more challenging to receive payments on time, if you receive them at all.


Let’s look at some simple ways service businesses can boost their A/R productivity and ensure they’re getting paid their dues.

The Importance of A/R Management in Business Services

The question of business service productivity is simple: How can you set up your operation to keep things running as you help others?

The answer is just as simple: Invest in a business service yourself! For example, automated account receivable software gives service companies an entirely new way to track customer invoices, manage accounts, and handle payment processing. It’s a tech-centric style of accounts receivables management that yields big benefits for companies.

For example, consider how the consulting firm Vernovis leveraged automated accounts receivable software to improve its manual processes and customer outreach. With something as simple as a new A/R strategy, Vernovis increased its cash flow by 83% and reduced its average days sales outstanding (DSO) by 25%!

The benefits of a stronger A/R process are easy to see:

  • Optimize cash flow
  • Shorten the sales-to-payment cycle
  • Reduce risk
  • Improve customer relationships
  • Minimize the need to invest time in lengthy Dunning processes

Above all, improved A/R processes free up resources for service businesses and make it easier for them to provide higher-quality services for their own clients. There’s a lot that A/R optimization can bring your company – but how do service businesses start the improvement process?

Tips to Improve and Manage Accounts Receivable for Services Industry

Our first tip – implementing an automated A/R solution – is the most impactful change a service company can make to its process. However, it’s not the only technique to improve accounts receivables. Some other easy ways to boost A/R efficiency include the following:

  • Improve recording accuracy: It can be more difficult to keep track of services compared to physical products, so make sure that all services are appropriately registered and charged in your system.
  • Ensure invoice complies with contract terms: Make sure everything invoiced is consistent with the arrangements outlined in your engagement documentation. A/R platforms can show you the status of each open invoice and its payment terms to make this coordination easier.
  • Consider incentives for early payments: If customers are frequently late, it might be worth it to you to offer discounts or incentives for early payments. It’s a trade-off, and in a perfect world they wouldn’t be necessary, but incentives can support your collections goals and improve customer relationships all at the same time.

It takes some effort to implement these solutions, but it’s worth the trouble – particularly when you consider the long-term benefits of A/R optimization.

Consider another client of ours, the consulting firm Burwood. With a straightforward application of automated accounts receivable software, Burwood took charge of its collections process, reducing receivables-at-risk (RAR) by 77% and overdue invoices by 60% in only six months!

Get Proactive About A/R Efficiency With Gaviti

Invest in your clients by investing in yourself. With A/R management tools behind you, it’s easy to get a handle on your processes. And best of all, these solutions are easier to find than ever.

Gaviti’s A/R automation platform offers a simple, user-friendly way for service businesses to uplevel their collections processes. Aside from optimizing cash flow, Gaviti’s platform helps you reduce manual workflows, improves team collaboration, and prepares your company for the future by giving you a scalable way to manage collections tasks.

Contact us to learn more and book a free demo of our platform!

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