The vast majority of customers have no problem paying what they owe you and doing so on time. But poor accounts receivable management can frustrate even your best customers. Customers in general expect a bill at a certain time and expect it to be due within a certain time frame, and they’re happy with that. But when your AR process is haphazard, it can affect your clients’ financial management.
Furthermore, when AR is not managed and monitored, customers are less likely to speak up and demand to pay. The result can be accounts that go unpaid for too long, difficulty in collecting what you’re owed, and a harder time managing your business’ cash flow and working capital.
Good Accounts Receivable Management and Good Customer Service Go Together
Good client relationships are built on trust, predictability, and consistency. When accounts are well organized and tracked, it’s easier for everyone to stay on the same page. Clients know you’ll bill them on a certain date, and they can arrange for money to be available to pay it.
When you apply your AR practices with absolute consistency, each client knows that they’re getting the same treatment as everyone else. Consider accounts receivable management to be a powerful, behind-the-scenes aspect of your overall customer service practices.
Accounts Receivable Management Best Practices
Use these best practices to keep your accounts receivable management on the right track.
- Regularly review accounts to ensure customer data is accurate and current.
- Establish a clear, consistent, and fair policy for credit approval and apply this policy consistently.
- Create an organized and consistent billing process, automating what you can.
- Define clear roles and responsibilities for your billing and AR teams.
- Ensure all payments are applied and credited correctly.
- Establish a defined collection policy for past due payments and enforce it consistently.
- Monitor AR for metrics like Days Sales Outstanding (DSO).
- Offer payment methods your clients prefer, such as online payments and recurring payments for clients who pay a flat monthly rate.
Outsourcing Accounts Receivable Management Is an Option
Maybe you’re thinking, “That’s great, but we’re a small business without the resources to have an AR chief or a billing team.” Don’t worry. Outstanding accounts receivable management doesn’t require an entire department and can be handled by a small team or even an individual with the right tools and the determination to make it happen.
Additionally, it’s possible to outsource accounts receivable management to companies that take care of all of it for you. This can be more cost-effective than hiring an AR chief, and you can be confident that your AR needs are being handled by professionals.
Accounts receivable management and strong client relationships go together. Rare is the client who simply doesn’t want to pay for services. Most of your clients are ready and willing to pay their bills on time, and if your AR practices are sound and consistent, you make things easier on them. Offer multiple payment methods from which they can choose from and you increase the convenience factor (and their loyalty) more.
When clients know what to expect and know you manage accounts well, they’re happy to stick with you. And, of course, they’re far less likely to end up in a billing dispute that could damage your relationship with them.
TSI provides solutions for accounts receivable management and debt collection services for businesses like yours. Click here for more information.