Accounts Receivable (AR) Managers often have to perform a juggling act regarding their work. From managing teams, building efficient processes and optimising the business’ cash flow – there are a lot of responsibilities that come with the role. All these aspects of the job must work in sync to deliver the business objective of getting paid on time.
In our recently concluded webinar, “Top 10 Tips Every Accounts Receivable Manager Should Know to Get Paid Faster” we invited Susan Jersky, AR Manager at The Better Food Distribution Co., to speak with Arjun (AJ) Singh, co-founder and CEO ezyCollect. In the session, Susan shared her insights on best practices to help AR Managers and teams work efficiently.
Here are the key takeaways from the session.
Top 10 Accounts Receivable tips to get you paid faster
Managing your AR Team
While everyone can implement best practice methodology, and there’s now more good technology available, the key to success in accounts receivable management is still the human factor that orchestrates efficiencies. Based on Susan’s experience, the AR Manager’s responsibility is to create a positive and uplifting environment for her staff.
1. Focus on reward and recognition
Recognising your team’s efforts and hard work is one of the most proven ways to motivate staff. Benchmarking your staff’s salaries according to their skill is one way to do this, but you can use many other incentives and methods.
In the webinar, one of the tools discussed is time, which can come as giving time back to your staff if they completed their tasks for the week earlier than expected or achieved a great goal.
2. Focus on strengths and improve weaknesses
Everyone has a different way of working. Knowing your team’s strengths, weaknesses, and quirks helps minimise conflict and encourage productivity. When you got processes in place and utilise accounts receivable technology to back them, it’s easier to focus on the people to improve their skills and leverage their strengths to ensure an efficient, high-performing team.
3. Lead by example
Leading by example is an effective way of managing people. But it’s not just about setting a good example in doing good work but also encouraging a rich and meaningful life. Achieving work-life balance is crucial to happy and healthy individuals and lays the groundwork for productive teams.
Tips for Enhanced Productivity
Many consider Accounts Receivable management as repetitive work of sending invoices and chasing payments. However, as technology like accounts receivable automation becomes more prevalent, the role of the AR Manager and staff is also changing. Here are just a few tips to help your team focus on constant improvement and how technology can provide you with accurate information to achieve that.
4. Customise client communications
Understanding clients becomes crucial as accounts receivable teams move towards a more advisory role. Customising your communication is vital to help you gain a deeper understanding of your client’s unique needs. While, at the surface, this may seem time-consuming, leveraging technology can enable your team to create customised communications much more efficiently.
5. Consistent messages to clients
Aside from customising communications, your message must be consistent to ensure understanding and avoid any future disputes between you and your clients. Online credit application forms can be a great way to ensure this right from the beginning. When you’ve got the whole process in place from onboarding, you can start instilling the information and the terms and conditions by which you wish to conduct business with your customers. This message is constantly reinforced to any payment reminders, ensuring that there are no surprises for customers in how you do business.
Related blog post: What should your business include in a B2B Credit Application form?
6. The entire company focus on data integrity and process
Keeping data up-to-date and ensuring its integrity should be a key focus in accounts receivable management. The correct data can enhance communication with clients and produce better results. However, it’s not only the AR team that needs to be concerned about client information and data. It’s the whole company – from sales to admin to management.
An efficient client onboarding system can help eliminate data entry errors and check for information accuracy. This can significantly save the time and effort it takes for your team to rectify incorrect information and prevent future disputes with your clients.
Tips for Better Cash Flow
The key to a healthy cash flow starts with building good customer relationships. Good communication and empathising with your clients give you a clearer picture of issues and help you provide a feasible solution that helps them improve their payment behaviour.
7. Provide multiple payment options
Getting paid accurately and on time is your goal in accounts receivable, so it’s essential to make this step easy. When you provide multiple ways for clients to pay their invoices, you also give them the flexibility to pay you in the way that they can.
On top of this, leveraging 24/7 online payment platforms also make payment transactions more convenient for your customers. Providing this option to pay whenever they want removes another hindrance in receiving payments on time. With a payment platform, your clients also can download their invoices and statements, saving your team a lot of time from answering invoice copy requests.
8. Client onboarding and risk mitigation
Risk management is one of the most critical steps to improving cash flow. According to Susan, she has seen a decrease in their defaults by adapting good risk management practices. With the help of digital credit applications and risk management tools, you can protect your business from bad debts and minimise future problems in your accounts receivable collections.
Assessing and monitoring credit risk also allows you to set up credit terms based on reliable information, giving you that right balance to maintain good client relationships whilst protecting your business from unnecessary risks. An excellent example of this is if a customer has slightly higher risk levels, you can provide a direct debit option. Providing this alternative allows you to manage your risk without rejecting a customer outright.
Related blog post: How an enhaced credit application process can protect your business from bad debts
9. No charge CC if possible
Credit card payments are just one of the many options your customers can choose from, but credit card fees often scare businesses away from offering this payment method. While you can always charge your customers for the fees, you can also consider absorbing the fees. In the webinar, Susan shared her perspective on credit card payments.
“The 1% that we are paying on a credit card is pretty much nothing compared to the collection efforts and the late payments that we receive,” said Susan adding that this is especially true for their smaller customers who often don’t pay on time.
With more and more customers looking into credit cards to make their payments, exploring the option of not charging credit card fees can be beneficial when measured against other costs involved in the AR collection process.
10. Communicate with problematic, late paying clients
While automation can provide you with the speed to collect payments, the human touch is still important to effectively get paid – especially from delinquent customers. A considerable part of automation in communications is to sort out customers that need more attention. Most customers would want to maintain a good relationship with suppliers, but certain situations might’ve happened that affected their ability to pay on time.
Clients appreciate it when you talk to them personally and discuss the problem. Having that direct information from your clients gives you more control over the situation instead of relentlessly chasing them without any concrete plan to solve the problem.
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