The last thing you want as a business is to have your AR make a mistake or waste too much time and end up with a giant backlog that needs to be combed through, especially in time-sensitive seasons like the holidays.
Things can get really messy when you factor in the recent rise in health insurance exchanges that need to be addressed, you’ll feel at a loss on how you’ll ever get ahead of the paperwork. To help trim the fat and cut down on the number of problems that can come up in accounts receivable management, we’ve compiled all the important components that go into an effective strategy.
1. Always maintain a positive image.
Customers who feel badgered or cornered will be less likely to pay their debts on time. This is sort of the fight or flight response to all bill collectors. Most will avoid paying the bill if they can get away with it or if they feel the voice on the other end is too aggressive. If you stay within arm’s length of your customers who may be struggling to make payments, they will feel more comfortable reaching out to you and finding a way to clear that balance.
2. Be flexible with your payment system.
If you don’t budge with your payment terms, then you will likely meet much resistance and a higher frequency of late payments. Some payment is better than no payment, because it shows that the customer intends to pay, rather than entertain the idea of going into hiding. Nowadays, you can get simply send an email invoice when you want to offer flexible payment plans, there is no expense for adjusting rates.
Another vital component for an effective accounts receivable strategy is to offer multiple payment methods. At the very least, you should have a PayPal option and a debt/CC option. An electronic bank wire, or ETF, is another big convenience option for customers who are accustomed to paying their bills online via their bank.
As long as you have enough lanes for customers to drive through and make their payments, you will find your rate of unpaid debts go down significantly. Simply filing away claims to a collections agency is not only more costly, but also a real burden on the growth of your business. Only do it when you have no line of communication and a clear sign that the client does not intend to pay.
3. Whoever enters the data, owns the data.
As an AR manager, you have to keep things running like a well-oiled machine or you’ll find the smallest things can cause knots, traffic jams, and unnecessary frustration. By following this mantra, whenever an error is found in any accounting record, you must trace that error back to its original author and let them know there was a problem, otherwise you will be wasting more than just your time if it happens again and it somehow slips through the cracks.
This may sound like you might be taking your job too seriously, but if you want your team to grow, they must feel more engaged than just sitting in their assigned cubicle and going through the motions. Team-building is part of what makes accounts receivable management great.