As business has evolved, so too has the role of the CFO. What was once a position heavily focused on number crunching has morphed into something much larger. “I really don’t spend a lot of time on the financial numbers anymore. I’m mostly focused on operations and strategic planning.” Said a CFO recently interviewed for an article for Forbes Magazine. Because the role has become so focused on assessing businesses needs and strategic decision-making across the organization, accounts receivable management automation should be of great interest to these busy professionals. Accounts receivable is an accounting function, but it is also a strategic asset that can greatly impact a companies ability to meet financial obligations and overall corportate goals. Continue reading
Because Sage MAS 200, now Sage 100 ERP, is the perfect solution for companies who are outgrowing smaller systems, it is likely that current and prospective users would be considered SMBs. Why does business size matter when it comes to collections for Sage MAS 200? According to a recent study by Lab42, companies in that size range spend a significant amount of time managing their receivables, yet they are still struggling to do so effectively. Continue reading
When it comes to increasing cash flow, one of the most important things a company can do is focus on accounts receivable. As one of the most critical short-term assets in any business, reducing the amount of time that passes between invoicing and receiving payment can drastically improve your cash flow. Information is power, and providing accurate information to your collectors and to your customers as quickly as possible plays a significant role in your ability to get paid faster. Continue reading
What is a Credit Collections Policy?
A credit collections policy is a document that includes “clear, written guidelines that set the terms and conditions for supplying goods on credit, customer qualification criteria, procedure for making collections, and steps to be taken in case of customer delinquency” (businessdictionary.com). In fewer words, it is a guide offering an organized and repeatable philosophy on selling on the rules, regulations and procedures to manage daily operations. The goal for a Credit Plan is to clearly define these elements so that sales and collections employees conform to documented steps and procedures designed to optimize your resources, reduce credit risk, and improve overall cash flow. Continue reading
The first step of the accounts receivable management process is invoicing. It seems pretty straight forward and easy, but many times unclear invoices are at the root of late payments. Here are 8 common invoicing mistakes to avoid in order to become more effective in not only collecting accounts receivable, but doing it before they are past due. Continue reading
Managing accounts receivable is a time consuming and sometimes tedious task, especially if you’re an A/R clerk in a company whose procedures are built on manual A/R managment processes. A large majority of companies of all sizes rely on spreadsheets, aging reports, and functionality in their ERP and accounting systems to help them manage accounts receivable. Those companies are, according to a recent study conducted by Lab42, wasting a significant amount of time that could be better spent growing their businesses. Continue reading
For A/R management professionals, tracking accounts receivable email communications to and from customers is critical to timely payment and customer service. Sure, reports tell you if an invoice is overdue and by how many days, but there is no context in a report to tell you why that is happening. That context is found in the emails sent back and forth between your staff and customers, which is what makes them so important.
As we all know, email inbox’s tend to get a bit out of control, especially with a large number of invoices and contacts to keep track of. Wouldn’t life be easier if those emails were automatically stored with the customer contact information and tagged with the invoices referenced in a secure, central location? With the right accounts receivable management system, that dream can become a reality. Continue reading
Collecting unpaid invoices is not easy and it’s important to have a standard process for collections, but different situations call for different tactics. Here are a few general types of non-paying customers that need to be handled differently and a few suggestions on how to work with them:
· Will Pay – need a reminder: Call or send a note to remind them.
· Will Pay – on our terms: Deal with it for now and let them pay you on their terms, but decide if the customer is worth the longer payment cycle in the future.
· Will Pay – when an issue is resolved: Fix it and follow up by asking for immediate payment once the issue is resolved.
· Can’t Pay: If they are truly unable to pay and are willing to negotiate then set up a win-win payment arrangement. If this is just one more stalling tactic treat them as a “won’t pay” customer.
· Won’t Pay: Be firm and consistent in collecting until your efforts hit a dead end, at which time turn the account over to collection.
· Can’t Find: Turn the customer over to professional collection.
If you offer credit terms then you probably have an accounts receivable collections problem and you may not even realize the negative impact that it’s having on your bottom line and your cash flow. Most companies sell on 30 day credit terms, yet most companies take between 45-60 days to collect on invoices. How long is it taking you? and how much money are you spending trying to collect it?
Typically companies don’t even focus their time and energy on collecting until a cash flow problem arises or they are looking invoices grossly past due with huge balances. Sound familiar?
Accounts receivable management is a critical factor in ensuring the financial health of any business, and the internal processes you use to manage and track invoices plays a massive role in your overall success. Put most simply, late invoices mean late payments; fast delivery and frequent invoicing allows your customer plenty of time to process and send the money owed, which means you need to get the invoice in their hands ASAP. Managing accounts receivable in QuickBooks and invoicing in general takes time, and your collection employees are busy…so how can you put that into practice in your company? Continue reading
The most effective way to increase the success of your collection efforts is by forming and executing a systematic, consistent, and controlled communications plan. How often are you connecting with customers today? Many companies send an invoice and do nothing until the invoice is late and then they start playing catch-up. That reactive approach breeds stacks of unpaid invoices. At the same time, it’s understandable that you don’t want to contact your customers too frequently and make them feel like they are being harassed or dirve them away. Below is a schedule that will help you send the right message at the right time to make you more effective without driving your customers crazy! Continue reading
Asking for money can be uncomfortable, but it’s a part of doing business. No matter how much you may be afraid that asking for payment will negatively impact your relationship with a customer, it won’t happen as long as you do it correctly. Your customers will not get upset and leave your company because you asked for payment for products/services provided, they know they owe you. The topic itself won’t result in bad blood, but the way you handle the conversation might. Remember, accounts receivable management is just as much a customer service function as it is an accounting function. Continue reading
The most important thing you can do in the case of collections is to be firm, yet polite when speaking with customers about payment. Accounts receivable is a combination of accounting, sales, and customer service. Every contact you have with your customers has the potential to either improve their opinion of your company, or drive them away, especially when handling a sensitive topic like payment. Crafting an accounts receivable collection letter that is both friendly and firm is the best way to elicit both positive feelings and payment from your customers. Continue reading
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.
As with the selection of any software system, choosing the right accounts receivable management software is paramount to its success. The goal of accounts receivable management software is to reduce disputes through the use of best practices, automate your collectors most time consuming activities, consolidate information, and work with your ERP and accounting system to help you get paid faster. But what makes a good solution? which features and functions should you look for in a system to help you reach those goals?