As an accounts receivable professional, it can be overwhelming to come into work everyday and see a mass of calls, emails and overdue accounts that you have to deal with. Where do you even get started when it comes to tackling these accounts? How can you organize everything in your day to be sure you are collecting as much as possible and doing it in the most efficient manner?
In this whitepaper, we will cover the best ways to prioritize your day, who to call first, how to schedule follow ups and best practices for collecting on all your over due accounts receivable.
CALL OR EMAIL?
In the accounts receivable department, representatives are often constantly trying to do more with less. It’s a constant battle to find the most efficient way to collect as much money as possible, especially if you’re at a smaller company with a one, two or three man team. You simply don’t have the hours in the day to call every single overdue account, so you have to choose who gets a phone call and who is simply reminded to pay with an email.
This can be a balancing act to decide who to make a phone call to and when. A customer is much more likely to act on a phone call than they will to an email. Emails can get lost an in inbox, or simply never make it due to spam filters. Emails are easier to ignore or even forget about. For this reason, many people prefer to make phone calls to accounts that really need to pay up.
So, when should you make a phone call and when should you be sending out emails? You should prioritize emails to be going out to those who have the least amount of days past due on their account. These are friendly reminders to make a payment on their account as soon as possible. A customer could have always simply forgot, and these emails will push some accounts to make a payment, moving them off your list of accounts to worry about.
To send emails to everyone that is just a few days past due, using accounts receivable automation can help to maximize your time. By putting customers into aging buckets you can automate who gets what email and have them all sent out with just one simple click.
Once you have sent out an email to some of these accounts, schedule yourself a phone call follow up. At this point these accounts will be longer past due and they have ignored your first email attempt to collect. These customers are worthy of a phone call because they have had a chance to pay once already.
They key to deciding whether to send an email or make a phone call to collect on an account is how far past due they are. Sometimes it is tempting to make a phone call to those that have the largest amount past due, but those accounts that you haven’t heard anything from should be the most concerning. Send an email to anyone who is just 30 days late or less. Once they have crossed the 30 day line and received an email, it’s time to pick up the phone.
WHO SHOULD YOU CALL FIRST?
One of the most important parts of being an accounts receivable collector is finding a prioritization flow to your day. In order to collect as much of your accounts receivable as possible, you need to determine which accounts need to be contacted first and in what order. Your workflow can make or break how well your accounts receivable team does, and how well your company does based on cash flow.
Many companies have different methods to deciding which accounts to tackle first. You may be reaching out to your customers who tend to have a bad reputation at paying on time or the customers with the largest account balance due. However, these strategies can leave some accounts receivable dollars behind. When you’re only focused on reaching out to a specific bucket of customers, you tend to neglect the rest of your customers.
The best strategy to starting your day and getting paid faster is by putting your customers into aging buckets on who is the latest past due for 31-60 days, 61-90 days, 91-120 days and 121 plus days. Work your way backward by reaching out to the customers that are in the 121 plus days bucket. By working down through a list, you are most likely to reach out to the most accounts. You can continue down your list until each customer is touched. After reaching out, you can schedule follow ups to be sure the customer follows up on their promise to pay.
Find the best and most efficient method to start your day in accounts receivable can be tricky. You want to put pressure on the riskiest accounts, especially those that owe you a lot, but can’t simply ignore the rest of those that owe you money. By working through an aging list, you can be sure to hit all accounts, not just those that need the heat. This method helps you to collect from everybody.
SCHEDULING FOLLOW UPS
One of the most important time spent in an accounts receivable professionals day is making follow up phone calls. Follow up phone calls are made to customers who have already been reached out to once, but have yet to pay. The customer may have not answered the call, but you left a voicemail and want to be sure they received it. The customer could have actually spoken with you and made a promise to pay, but didn’t make the payment, which would especially require a follow up phone call.
A follow up gives those customers who are clearly dragging their feet on making a payment the extra push they need in order for you to collect. These are very important phone calls to make every day, so setting reminders for follow ups is crucial for day-to-day collections success. Below are three different methods collectors typically use for setting follow up reminders, with both their pros and cons.
This is the “old fashioned” way of making accounts receivable follow up reminders. This is usually a paper calendar on someone’s desk or a planner where the accounts receivable professional can write down who they need to call and one what day. This is the most cost effective option, as most calendars such as this don’t run more than $8. However, it is also the option that is most rife with errors. A collector can forget to write down an account name, and then they will lose sight of that customer. If you are not at your desk, you can also miss the call. There is also no visibility into whether that follow up call was made.
OUTLOOK OR GMAIL
This is an option that many accounts receivable professionals use because it’s already a platform you are using. There is no additional cost to use the calendar that already exists in your email platform. Additionally, your email platform will usually pop up reminders for you so that you won’t miss a phone call while you’re busy. However, these reminders are not synced in with your existing accounting software, giving management no visibility. If a collector were to leave or go on vacation, no one can see which follow ups they were planning to work on. Collectors can also forget to add an account into their email platform calendar, allowing an oversight of important accounts to call.
ACCOUNTS RECEIVABLE AUTOMATION
This is the most ideal option for accounts receivable professionals. It fills in the gaps that all the above options fail to reach, such as visibility and mistakes. An accounts receivable automation platform is integrated with your accounting software, directly syncing which accounts are passed due and which ones need follow ups. The automation software can be accessed by upper management and follow ups can be assigned to different users, allowing collection activities to continue even when a collector is not in the office. Follow up reminders can be set to pop up directly on the home screen of where you are already working on all your collection activities. The only downside is this is an additional cost to purchase, unlike your already existing email platform or a cheap calendar option.
Each option has its upsides and downsides and your choice on which follow up reminder you use is really dependent on how large your accounts receivable department is, how many invoices you typically process a month and how many customers you have. However, you are likely to make mistakes if you are not using an accounts receivable automation tool. This option is the most robust for any company with more than 100 invoices a month.