Accounts Receivable (AR) is a relatively small cog in your business machine but it carries with it an outsized cost if mismanaged. Conversely, if managed well it offers an outsized benefit to a business in the form of predictable cash flow and predictable customer experience. No surprises. You’re happy, your team is happy and your customers are happy.
Here are the top ways we see CEOs thinking and managing differently when it comes to AR:
1. AR is a customer experience
If you’re a customer-centric organisation then you will care about AR. A mistake is to see it as an admin after-thought. It’s better to view it as a key part of your customer experience. How you deal with and resolve invoice queries shows your true colours. Rapid resolution stops things from festering. Ideally, your AR process should be designed according to the types of customers you have.
2. Late payment is a fact of business
The reality is that businesses (especially smaller ones) are choosing who they pay first, especially when times are tight. Sometimes, in larger businesses the Accounts Payable team are choosing who they can pay last. Don’t let it be you. In Australia alone, one in five invoices payable by ASX 200 companies to small businesses have been late by more than 30 days, despite the fact, small businesses make up 88 per cent of all Australian businesses.
But with professional AR you can move the dial on your cashflow and your customer service. Whatever the reason, the onus is on you, the service provider to follow-up and resolve issues until paid. Does this mean that late payment is your fault?
3. AR is a role, not an extra task
Often the job of AR is delegated to a team member who lacks the time, training or desire. This makes AR an ongoing issue, consuming more time and attention than it should.
The problem is when you delegate the responsibility of AR as an “extra job”, you’re not delegating one job, you’re delegating several:
- Responding to accounts queries
- Tracking and reporting on aged receivables
- Sending statements
- Making follow-up calls
The question, have you (as CEO) set your person up to fail because you’ve not given them the tools, training and time to deliver according to your expectations?
You have good months and bad months. Bottom line, it’s your money and it should be in your bank account so you have the most options available to you with your capital. While you might be laissez-faire about it now, one day you will want the cash (to pay tax, unexpected bill etc).
4. Who should you have on your AR team?
It can be quite challenging figuring out when the perfect time is to hire new employees or create new positions as your company grows. It’s relatively easy to justify when to hire a new salesperson because with them you will be able to close more deals and hopefully make more money, right? Making the same decision about accounting functions like AR is a little bit more difficult, but just important.
In our guide – Eight Ways to Solve AR – we weigh up the pros and cons of the common options, so you can decide what’s the best approach for your business based on your current situation and objectives.
5. What does best-practice AR look like?
- Prompt follow-up when accounts fall overdue, persistence to get through, tenacity to find the right person, and
a ‘serving’ attitude
- Good systems to ensure accuracy and timely invoicing
- Good record keeping
- Holding customers accountable
- Feeds valuable insight back to other parts of the business (quality issues, stop credit)
- Creative, problem solver
- Credit checks to stop bad-eggs getting through the door
CreditorWatch Collect is the on-demand, scalable AR solution for growing businesses everywhere. You won’t find a more passionate AR organisation on the planet.
We work with businesses all over the world to streamline their AR systems and processes through automation, outsourcing and expert advice.
- Free your team from the #$@&%*! of chasing late payment.
- Gain 2 to 12 person-weeks per year and get LOTS more done.
- Free up $50k to $250k in working capital to invest elsewhere.
- Delight customers with a ‘service-first’ approach to AR.
Jump on the phone and book a chat with one of our Receivables Specialists or alternatively, start a 14-day trial – no credit card required.