A/R Management & Automation
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The CFO’s guide to collecting receivables faster

In the spectrum of accounts receivable (A/R) collection techniques, there’s a recurring theme you’ll find: The majority of A/R optimization strategies teach companies how to collect receivables faster. It makes sense, of course. A/R collections are a question of cash flow, and few businesses these days can afford to provide services without promptly collecting on the payments they’re owed.

While some companies can bear short-term cash flow problems, it’s never optimal. Accelerating collection of receivables is often a first line solution for ensuring a healthy balance sheet. CFOs and financial teams that want to collect accounts receivable faster should begin with these steps.

Time Your Invoices Correctly

A good place to begin is your invoice process. As good practice, invoice as quickly as possible after services are rendered, and set clear, unambiguous payment terms within the fine print. Aside from simply being good business, a quick and detailed invoice allows you to bill clients while your services are fresh in their minds. Assuming they’re happy with your work, capitalizing on this timing may increase the odds of a prompt payment.

Speaking of timing, if your clients struggle to pay for your services in one lump sum, you can send them a series of staggered invoices as the project progresses.. This type of incremental invoicing can be quite helpful for companies struggling with cash flow issues of their own, and if you’re using an automated A/R system to manage invoice delivery, it’s easy to adjust your invoicing schedule to accommodate these types of strategies.

Offer Discounts for Prepayment

If you’re curious how to collect accounts receivable faster, why not preempt the need for invoicing altogether? Assuming it’s feasible for your business, you can ask for pre-payments ahead of service, or just a deposit before work begins. Incentivize clients to do this with discounts – and make these deals clear to your clients as you negotiate.

This strategy can help ensure that some revenue is captured early, even if the client ends up being delinquent. It can also help capture new business by allowing you to push “discounted” service rates to prospects, something that can go a long way in supporting your B2B collections efforts.

Keep Sales and Finance Coordinated

The above tips involve different ways to encourage payments from customers, but accelerated receivables solutions also depend on your internal processes. In particular, the ongoing relationship between sales and finance. Ensure both teams have a seat at the table when determining A/R policies, with particular respect to the following:

  • Company-wide payment terms
  • Policies for issuing credit
  • How cash is applied to invoices
  • Collections follow-through and dunning

A/R collections touch both sides of finance and sales, so keep everyone on the same page as you assess collections efficiency.

Make Payments Easy for Customers

Every company understands the importance of making things simple for customers, and collections is no exception. The easier things are for clients, the more likely it is you’ll get paid on time. Improving this area can take several forms. For example, considering building out your payment options to ensure everyone is able to pay through their preferred means:

  • Credit cards
  • Debit cards
  • Automated clearing house (ACH)
  • Direct deposits
  • Digital wallets

Better still, collect accounts receivable faster by setting up self-serve payment options through a customer portal. This type of hub provides a centralized way to coordinate customer details, provide them documentation, and collect payments due. This type of cloud-based A/R solution is becoming commonplace due to how efficient it is, and those without such features in their A/R process may already be falling behind.

Make Payments Easy for Customers

A/R Should Be Automated and Collaborative

Most accelerated receivables solutions fall under one of several common themes: A/R should be a collaborative process among your staff, and it should be powered by automated solutions that boost cash flow collection. CFOs in particular have a responsibility of spearheading these initiatives among financial teams.

While we could spend all day discussing how to collect receivables faster, we suggest that any company interested in getting proactive about the process contact us at Gaviti. Automated A/R solutions are the single best way to improve collections, and we can show you just how easy these solutions are to set up in your own company.

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