Many companies struggle with accounts receivable and have a significant number of unpaid invoices slowing down their cash flow and hurting their bottom line . While it’s easy to blame your customer for late payment, it’s usually not their fault, it’s yours. Sure, you’re sending them invoices, but are you giving them any reason delay payment? Your customers have plenty of other bills to pay and you know they’re picking and choosing who to pay first. The question then becomes, “how do I get them to pay me first?”
Some of the most common reasons customers prioritize one invoice over another include the following, by correcting these issues in your accounts receivable process, you can get paid faster.
- You make it hard for them to have the invoice approved on their end.
- You’re late to deliver the invoice, making it impossible for them to pay you on time.
- Other vendors offer them incentives for early payment and you don’t.
- You’re sending incorrect or incomplete information, forcing them to contact you before they can make payment. Any extra step like this puts you further down their priority list.
- They’ve forgotten about you because you haven’t followed up on the invoice in a timely manner.
What do all of those things have in common? They’re all impediments to payment, roadblocks that will cause your invoice to sink to the bottom of the stack in your customers AP department.
By removing those roadblocks you can greatly increase the likelihood that you’ll be paid first, before their other vendors. Take a close look at each and every step in your current collections process and think about how it effects your customer’s ability to pay. Tweak those steps to make the entire order to cash cycle easy for you and for your customer.Here are a few specific ways to improve your process and keep your invoices at the top of the stack.
- Be sure your invoice format fits your customer’s requirements. It is helpful to utilize software that allows you to create custom invoice formats and assign them to the customer in question. By providing them with an invoice in the right format, they will quickly be able to have it approved for payment.
- Cut down on the time it takes to create and send an invoice which will help you get the invoice in your customer’s hands with plenty of time for them to pay you within terms.
- Always provide correct and complete documentation.
- Be sure your bill-to contact information is correct. Sure, Jack might be the guy your sales team deals with…but Jill is the person handling the invoice, so you want to make sure she is the one receiving the information. Double check this from time to time in case there has been a shift in your customers accounting department.
- Bill what you quote and be sure you store all quotes in a place easily accesses by the entire team. Should a customer have a question or challenge an invoice, any A/R employee can help them and resolve the issue quickly.
- Resolve disputes as quickly as possible.
- Communicate with customers regularly.
- Implement a system that allows customers to pay their invoices online. This makes it easy for them to do it on their time, not yours.
- Track the reason the invoice was not paid on time; otherwise you will not know what needs to be done to improve in the future.
- Store all important documents in a place where your entire team can access them to help customers.
That seems like a lot of work and it is, unless you have the right tool for the job. By implementing accounts receivable management software, you can take care of all of the above through automation and built-in workflow to help you identify who to call, when, and why, with all the information you need at your fingertips to resolve disputes and to flat-out get paid faster. Integrated document management and automation makes it easy to communicate effectively with customers, documenting what you’ve done with insights to measure the results.
Get past every roadblock, including those on email.
Learn more here.