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.
Depending on the size of your company, you will have various resources to manage your accounts receivable. Smaller businesses may have a single, part-time employee, while larger companies will have several levels of credit managers, collectors, and other resources involved in various aspects of the credit and collections process.
It is safe to estimate that most companies should staff at least one full time credit professional for every 1,000 invoices created each month (or at least one part-time employee for 500 monthly invoices) – especially if they are not using software for invoice delivery or collections automation. The same principle holds true if they are managing 500 to 1,000 active customers per month, assuming that each customer has 1-2 open invoices each. More information on sizing your credit and collections team is provided in our blog article How Account & Invoice Volume Effect Accounts Receivable Management.
Roles & Training
You should also define which available resources have authority to manage various aspects of your accounts receivable, credit and collections policies, and procedures. Who can put a customer on credit hold? Who determines customer credit limits? Who negotiates payment plans? Who makes the first phone call? You should also ensure that resources have the proper training to be effective in their jobs. You cannot expect a young accounts receivable clerk to know how to make collection calls if he or she has never had training and doesn’t feel comfortable talking on the phone. Keep this in mind as training is as important as selecting the right resources for your team. More information on accounts receivable management training options and identifying roles and responsibilities can be found in our 6 Steps To Creating A Business Credit Policy and Collections Action Plan white paper.
another accounts receivable best practice is making sure you have the right number of employees for it. How many employees do you need for effective accounts receivable management? It’s a tough question to answer, but this white paper will help you figure it out.