There is a right way and a wrong way to approach accounts receivable. Depending on which route you take will determine your success in collecting on your accounts receivable. Keeping up with and following accounts receivable best practices is the best way to keep yourself on the right track towards collecting on all your open accounts. There are quite a few accounts receivable best practices, but we’ve highlighted the top five that all collection professionals should follow.
The longer it takes you to send out your invoices and collection letters, the longer it will take you to get paid. In some companies, invoices are only sent out once a month, however, this is not often enough. Invoices should be sent out to customers almost immediately after the product or service has been delivered. This can be achieved by sending out invoices weekly, then follow up with payment reminders and collection letters as often as possible.
Many businesses have a policy that they will not pay an invoice unless the purchase order is attached. If you are not including these supporting documents with your invoices, you are sure to put yourself behind on payments. Make sure that every time an invoice is sent out that you include any additional documents the customer may need to pay.
After you send the invoice, payment reminder, collection letter or other document to the customer, follow up with a phone call. It is not enough to simply send a letter or email, the customer will likely read it and then forget about it. If you are calling the customer, you are able to form a relationship that is hard for a customer to forget about. Following up with a phone call to ensure they received the invoice or other letter increases your chances of collecting sooner.
Invoices and letters take a long time for the customer receive via mail. They also run the risk of getting lost or not making it to the correct employee at the company. Sending email gives you a direct contact to the accounts payable department. It is likely that the AP contact is checking their email multiple times throughout the day, so your email will get to them immediately and helps you to get paid faster.
Trying to send out invoices more often than you already do and follow them up with a phone call may seem impossible or daunting to some. If you are doing every accounts receivable task manually, it is easy to see why. Using automation makes many of these best practices possible. You are no longer crafting or sending invoices for each individual customer. Instead this process is taken care of for you, so all you have to do is make that phone call and ensure the customer pays.The key to getting paid with accounts receivable is to be in constant contact with the customer. As soon as they slide of your radar, you have slid off theirs and payment will take a long time to receive. This is why most of these accounts receivable best practices revolve around talking to the customer more and sending more reminders and letters. If you can start implementing these accounts receivable best practices, you will see an increase in your collections.
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We know you’re busy and no matter how important improving your accounts receivable is, it can be hard to find the time and, let’s face it, the energy, to sit down and sift through the countless articles and resources about best practices in accounts receivable collection. To make your life a little easier, we’ve compiled […]
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