There are many accounts receivable best practices, but without an all-star team to carry them out, you’re back at square one. You assign resources to sales, marketing, preventative maintenance, customer service, and virtually every aspect of your business, but who is responsible for managing your accounts receivable? In most businesses, it’s a part-time, untrained bookkeeper or junior accounts receivable clerk. Considering that accounts receivable is such as vital part of your cash flow – does this sound appropriate? Probably not. Let’s discuss the steps to defining your accounts receivable management team.
How many times do you communicate with customers regarding past due invoices? This is an important metric to understand because studies show that companies who spend more time communicating with customers have, on average, have much healthier receivables, lower DSO, and less bad-debt. Email is a simple way to get in front of your customers regularly and provide them with all of the information they need to submit payment, but the timing of those emails and the language used will impact if and when they pay you. Email, like all tools, when not used correctly will not work. Below are a few accounts receviable email templates and a brief explanation of the different types of emails you should be sending to customers. Continue reading
Our company works with all kinds of organizations who operate across various industries, from small companies to multimillion dollar enterprises. In our experience working with so many different kinds of companies and learning how they manage accounts receivable, we have come to a realization: No matter which industry a company is in or what kind of accounting system the use, they all struggle with the same thing, effectively managing accounts receivable.
Companies of all shapes and sizes spend hundreds of thousands of dollars on capital equipment and implement expensive ERP and CRM software for their general business and sales operations, but they do not have the same systems in place to automate or manage accounts receivable workflow. Instead they use the following strategies to attempt to manage accounts receivable, potentially losing thousands of dollars a year on bad-debt write-offs, financing costs, and related costs of delayed or denied payment. Continue reading
Among the most effective ways to improve your accounts receivable is by prioritizing your credit and collections activities. This way you can take care of your most critical activities first, such as your largest outstanding invoices, delinquent accounts, etc. before moving on to your less important activities. This strategy will help you collect more efficiently, get paid faster, and increase your cash flow. Unfortunately, without the right tools and processes in place, it can be an extremely time consuming and overwhelming task for smaller A/R departments, which is why many companies struggle to practice this strategy. But there is something you can do to solve this problem in your A/R department. Continue reading
Accounts receivable management should be looked at like a strategy and a process, not just an accounting function or as the result of doing business. Like any other process or strategy, there are a number of steps that need to be taken for the best result. Be methodical in your accounts receivable management and go through the following 6 steps to ensure timely collection, healthy cash flow, and positive customer relationships. Continue reading
May 13, 2014, Chardon, OH- Today, e2b teknologies, publishers of Anytime Collect accounts receivable management software, announced a new white paper entitled “How to Eliminate Accounts Receivable Invoice Disputes & Get Paid Faster.” The white paper was written to explain the negative impact payment disputes have on cash flow and to illustrate how better managing accounts receivable can significantly reduce disputes to allow companies to fully utilize their accounts receivable asset. The white paper provides proven strategies and best practices to help companies reduce invoice disputes and bad-debt; improve cash forecasting and cash flow; and increase their overall operational efficiencies. Continue reading
One of the best ways you can gauge the performance of your accounts receivable management strategies is by calculating your accounts receivable turnover (ART) ratio. ART helps measure and describe the efficiency of a company in collecting their credit sales. The accounts receivable turnover ratio is a good indicator of whether or not your credit and collections processes and terms are benefiting for your company. Generally a high value is an indication that your accounts receivable management strategies are working, a low value may indicate inefficiencies in your collections. Different industries have different average ratios, so be sure you are comparing yours against other companies in your industry to see how you measure up. There are a few things you can do to improve your ART including the following: Continue reading
Accounts receivable management is no easy task and pulling together an effective strategy means following the seven C’s of credit collections:
- Customer service
Below is a deeper discussion of each of these factors, why they are important, and how you can implement them to make you’re accounts receivable more effective than ever before. You may find that some of these factors overlap but that it exactly what you want in an A/R strategy- a cohesive plan that works to help you get paid faster and provide customers with a positive experience in the process. Continue reading
On the outside, an invoice seems pretty simple- it’s a document that tells your customer that they owe you money, the amount they owe, and when it is due, right? Yes, but those are only a handful of the many things a well-crafted invoice should contain to ensure timely payment. Many of the companies who struggle with collections are not having a hard time because of their customers, it’s usually the company’s fault and invoices are among the top reasons for delayed payment.
Why? Because they are not sent out in a timely manner and/or the invoice has incomplete or missing information necessary for payment. Generally, all invoices should include the following: Continue reading
In a recent article we discussed what a credit and collections policy is and the importance of not only having a policy, but making sure it is updated regularly. In this article we will discuss what should be included for a complete and effective document. Your credit and collections policy can be as in depth or as brief as you would like, but keep in mind that even the most basic policy should help a company answer the following questions:
- What is the purpose of the policy?
- What are the goals of the credit department?
- How will those goals be measured?
- Who is responsible for what?
- What is the credit evaluation process?
- What is the collections process?
As you work through to build each section of your policy be sure to answer the above questions to help guide your sales and collections department. A solid credit policy will include the following sections: Continue reading
The first, and arguable the most important, step of the accounts receivable management process is invoicing. It seems pretty straight forward and easy, but many companies flounder to get invoices to customers in a timely manner or worse yet; the invoice has incorrect, incomplete, or missing information that further delays payment from your customers. What information is required for the perfect invoice? Some of these may seem a little obvious, but you’d be amazed at what some companies leave out and the negative impact that has on their ability to quickly collect on their invoices. 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
April 08, 2014, Chardon, OH- e2b teknologies today announced a reseller agreement with Solupay Processing Systems to provide a private-labeled cloud-based collections software under the Solupay brand. Solupay, a leading provider of electronic payment processing, will resell e2b’s Anytime Collect accounts receivable management software to the company’s prospects and current customer base under the name CloudCollect.
Chardon, Ohio, March 27, 2014-Today e2b teknologies, publisher of Anytime Collect accounts receivable management software, announced a multi-company conglomerate located in the Caribbean has chosen Anytime Collect for integration with their QuickBooks accounting software to be used in multiple companies throughout the corporation. Continue reading