The 2015 Perception Study from Receivables Savvy which surveyed over 200 accounting and financial professionals on various topics related to invoicing, payment, and credit collection experiences, brought to light some of the most common invoice collection challenges that cross industries. Below we outline those challenges and how businesses can implement proven policies and technologies to overcome them.

When asked, “What is your company’s biggest credit and collections challenge?” many of those surveyed, not surprisingly, spoke of various challenges with getting paid on time. The most frequently discussed accounts receivable problems included:

  • Getting paid in a timely manner or getting paid within the agreed upon terms.
  • Actually getting paid/getting the money, vs. receiving empty promises from customers.
  • Maintaining good customer relations with late paying customers.
  • Having enough time to manage the collections process.
  • Actually reaching customers or the right person when trying to follow up.
  • Dealing with credit approvals and offering lines of credit.
  • Collecting from customers that appear to be failing.
  • Resolving payment disputes.

A solid credit collection strategy can help you solve many of the above problems in a relatively short period of time, but having the right policies and technologies in place is crucial.

POLICIES

Do you have a credit and collection policy in place? According to the Receivables Savvy research, higher performing companies typically have a written policy in place. Of all the companies surveyed, 59% have a policy, 31% do not, and 9% do not know if they have one.

To those 59% who have a credit and collection policy in place, when was the last time you updated it? Just because it’s written does not mean it’s been touched in the last few years. Are people in your organization following it? These are crucial questions to help you reap the benefits of the policies and procedures you’ve laid out for your sales and credit collection departments.

To those who either do not have a policy today or are unsure, this can be a very useful tool in helping you streamline the process and improve overall performance metrics. Writing up a policy can be daunting, but we’ve put together a guide to help you through the process. Remember, you can always start simple and build upon the policies as needed. The most important part is having one in place.

Tip: If your policy does not already do so, require new customers and current customers alike to fill out a credit application form whenever they ask for credit or a change to their credit terms or limits.

TECHNOLOGIES

Accounts receivable management automation software with dashboards to quickly see the status of your receivables, track communication, automate the delivery of payment reminder emails, schedule follow up calls for collectors automatically, alert you when a customer needs to update their credit application, and much more to eliminate many of your most time consuming activities (such as pouring over spreadsheets or entering data) so you have more time to do things like call customers and manage disputes.

Electronic invoice presentment and payment can also help to alleviate some of the accounts receivable problems listed above by making it easy for customers to pay you online and eliminate the need for sending invoices and checks through the mail. This can help significantly speed up the payment process and improve the order to cash cycle.