When you have a smaller credit and collections team, it can eat up a lot of time calling customers that are overdue on payments. There simply aren’t enough hours in a day to do all the work, or so it seems. However, what a lot of companies with smaller accounts receivable departments aren’t doing is putting accounts receivable best practices into place. Creating a plan using best practices for collections prioritizes actions, which means you can spend time going after customers that owe you the most. We’ve highlighted 5 of the most important accounts receivable best practices that you can put into place now.
- Provide Accurate and Timely Information
One of the number one reasons a customer gives for not paying on time is because an invoice contained incorrect information. Whether that was being charged for the wrong amount or attaching the wrong supplemental documents, including the right information is critical for being paid on time. Further, having accurate information for internal purposes can help to decide whether a customer’s credit limits should be increased or for prioritizing who needs to be called next to collect on payment.
- Define Roles
If you are looking to end up in a standstill, there is no better way to go about it than having no defined roles on your credit and collections team. Whether you have a 10 person team or 2 person team, without defined roles no one knows what their job is. Who is responsible for placing calls to customers? Who is allows to increase credit limits? Simply by assigning specific tasks to employees, the most important actions will get done first.
- Standardize Messaging
Creating a template for the invoices you send or call scripts employees read is a huge time saver, which means your team can have more time to make collections calls. Further using a standardized message eliminates the temptations to get frustrated with customers who continually pay late.
- Define Dispute Resolution Procedures
In accounts receivable best practices, you have to have a policy in order to deal with invoice disputes. Dealing with them incorrectly can damage your reputation and put future and pending orders on the line. Team members should be prepared for each possible scenario with a documented procedure for identifying disputes. Having defined roles in place for an employee to specifically handle disputes, as previously mentioned, helps with this step.
Accounts receivable best practices can seem overwhelming at first, and like a lot of extra work. However, by utilizing accounts receivable automation a lot of time is freed up. Activities such as sending out invoices, prioritizing calls and accounts and actions based on roles are all automated using credit and collections software.
Accounts receivable best practices don’t simply exist to ensure you follow the rules, they will, in the end, help you to get paid faster. The more organized you are, the more your customers will appreciate the effort and feel more inclined to pay on time. If you become sloppy, your customers become sloppy on payments too.