Your company’s accounts receivables (A/R) collections process is essential to a variety of business functions. Cash intake, customer management, and long-term financial planning are all dependent on how well you’re able to collect on your outstanding invoices.
With so much at stake, it’s common for companies to wonder how to improve accounts receivable collection without investments in new staff.
7 Tips to Accurately and Effectively Manage Collections of A/R:
1. Maintain Standard Aging Process
Organize clients into “buckets'' according to the length of time an invoice has been outstanding. Common time frames include 0-30, 31-60, 61-90 , or even 90+ day windows. This will ensure your collections team is ready to handle clients across each of these aging stages.
Each time frame will require a different strategy as you chase invoices. Effective accounts receivable collection depends on this segmentation, so come up with a standardized process and stick to it.
2. Improve Staff Scheduling
Collections teams are often overwhelmed with the various collection tasks on their schedules; calling clients, organizing reports, or sending reminder emails. When these teams are shorthanded, it can hamper team productivity and morale.
Create a proper work schedule that assigns each team member specific functions and keeps everyone productive. Your goal is to keep everyone focused and prevent them from being distracted by other activities during peak calling hours.
3. Establish Collections Database
One of the most comprehensive ways to improve collections management is to set up a digital collections system. These platforms (including our Gaviti solution) offer an easy way to manage each of your most pressing A/R collections functions:
- Ongoing risk assessment
- Centralized tracking/management of all invoices
- Customer contact/communication management
- One single source of truth for collections
These A/R collection procedures can greatly boost the efficiency of receivable management tasks, no matter how many clients you serve.
4. Create Staff Support
Make sure your collections teams have the support they need to focus on their core workflows. This means maintaining an adequate administrative staff to handle day-to-day tasks such as customer calls, note-taking, and general upkeep.
If increased staffing isn’t feasible, look for ways to streamline the collection of accounts receivable in other areas. Leveraging automated accounts receivable is a good way to reduce the need for onsite staff to manage basic collections tasks.
5. Prioritize High-Value Accounts
Accounts receivable collection is all about maintaining cash flow in your organization. As you perform your receivable segmentation, create specific groupings for invoice value.
The highest-value invoices should receive the most ongoing attention. This will focus your attention on collecting those few invoices that comprise the bulk of your overdue receivable. This is a standard A/R collection practice that ensures your team is generating the best ROI from their efforts.
6. Get Other Teams Involved
You may notice certain clients are more difficult to collect from than others. In these cases, it may help to involve other departments, such as your account managers, support, or sales staff in your collections outreach.
Your sales team, for example, has valuable insight into your clients and customer relationships that your collections teams may lack. All customer details can be centralized in an automated A/R collection platform. But if you haven’t yet implemented such a solution, you’ll have to rely on your teams’ expertise.
7. Offer Multiple Payment Options
Inevitably, you’ll encounter clients struggling to pay on time. It’s to your benefit to offer these clients different payment options. These could be different types of payment plans or extended grace periods that make it easier for them to pay.
Work with your delinquent clients and develop a plan on paper. Make the terms clear. Have both parties sign-off to avoid later confusion. You can go a long way toward preserving business relationships by adding some flexibility to your process.
Create Long-Term Solutions for Accounts Receivable Collection
With these tips, you’ll hammer out many of the common inefficiencies companies experience during collections. But these are only the beginning of building an efficient A/R collections process as streamlined as it could be.
At Gaviti, we’ve spent years optimizing our automated collections platform to support business users. Our platform’s features go beyond basic improvements to bring a new dimension to your A/R collections. It reduces manual tasks, streamlines collaboration, increases process transparency, and plenty more.
To learn more about what we can bring to your collections strategy, visit our site and get familiar with our platform.