<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=349935452247528&amp;ev=PageView&amp;noscript=1">
Search
word-map-thumb

The Alternative Board Blog

Improving Your Accounts Receivables Process

Jan. 8, 2021 | Posted by The Alternative Board

Most businesses offer a solution to problems or otherwise fulfill a need experienced by their target audience. They can only go on doing this if—in exchange for delivering a valued good or service—they get paid for doing so. As part of overall business operations, therefore, the area of accounts receivables (A/R) is crucially important to a company’s ongoing success.

Unfortunately, not all clients pay their bills on time. Some go into arrears for weeks, months, or even years. This leaves the business who delivered the original goods or services essentially “out of luck” until (or if) the client decides to pay.

But rather than wait passively to see if this will happen, here are proactive tips to improve your company’s A/R status, and help make payment possible:

Get the process in order.

One common impediment companies face is the lack of a standard procedure by which to invoice and facilitate payment by customers. As we have noted elsewhere, it’s imperative to do a “comprehensive evaluation of past due clients and take action to make the appropriate payments” in as timely a manner as possible.

Another key step—revamp your A/R system so clients are invoiced immediately upon receipt of a product or service, rather than invoicing on a pre-specified day of the month.

Enlist the services of your skilled employees.

It’s vital for employees charged with collecting on invoices to go about the task in the right way. While, of course, you wish to collect outstanding payments, “you also want to maintain customer goodwill,” notes SF Magazine. Your team must understand that “companies that owe you money may be going through bad times right now yet could be great future customers.” Undertaking A/R collections should always be done respectfully.

Make a payment plan available to clients.

One issue around A/R is that some businesses simply are unable to pay the full amount of what’s owed at a given time. For this reason, consider drawing up a payment plan that makes sense for all involved. One option is to spread payments over an agreed-upon period of time (say, 12-14 months) which may make it easier for a struggling customer to come through with needed payments. It can also provide a favorable “bump” in your cash-flow situation.

Want additional insight? Best Ways to Secure Capital for Your Business now to learn more

DOWNLOAD

Redesign the company invoice.

Sometimes, the problem relates to a simple misreading of your company invoice. If details are vague or language is unclear, it’s easy for the customer to delay payment. On the other hand, when you ensure that the invoice “contains all the essential information clients need and is formatted in a way that is easy to process,” you’ll likely see better results, according to PNC Financial Services Group. The objective is put all relevant information (and nothing more) in your invoice, “so your customer’s accounts payable department doesn’t have to hunt down details that could delay your payment.”

Pay attention to the tone of your communications.

Ill-tempered or otherwise antagonistic messaging around payment due rarely achieves the desired result. Your initial contact with a delinquent client should take the form of a “friendly reminder” call, with a willingness to listen to what that client has to say. After that, as The Balance Small Business notes, you can “gradually increase the assertiveness of your follow up communication over time.” If this initial effort doesn’t work, “the tone may be more direct and assertive (but never offensive or unprofessional)”.

These are challenging times for all businesses, so being respectful in tone and offering payment alternatives may be the best approach to collecting on accounts receivables.

Want to learn more about effective cash flow management? Register for our complimentary TAB BOSS Webinar, “How to Increase Your Company’s Cash Flow.”

Read our 19 Reasons You Need a Business Owner Advisory Board

DOWNLOAD

Written by The Alternative Board

Related posts

8 Business Lessons From TAB Members
Sep. 29, 2021 | Posted by The Alternative Board
Business lessons learned from the real world are far more valuable than those learned in school. As a result of the pandemic, we have learned more in the past year than at any other time. Faced with...
Part Two: Benefits of a Peer Advisory Board: Board Members Tell All
Sep. 7, 2021 | Posted by Phil Spensieri
In Part One of Benefits of a Peer Advisory Board: Board Members Tell All, you learned a little bit about what it was like to be a TAB member, from the time commitment it takes to the many reasons why...
How to Reduce Organizational Complexity and Boost Productivity
Sep. 2, 2021 | Posted by The Alternative Board
  As in our daily lives, the world of business has grown a great deal more complex in recent times. Generally speaking, every organization finds itself challenged by innovations in technology,...
Why Your Business Needs Standard Operating Procedures
Aug. 26, 2021 | Posted by The Alternative Board
Running a business is a costly, time-intensive process. Costs and time can grow exponentially if an organization lacks a system whereby products are made, or services rendered in a consistent manner....
5 Ways To Tell When Your Business Needs a System Overhaul
Aug. 17, 2021 | Posted by The Alternative Board
We all know that businesses need to accomplish many tasks each day for their companies to function. And they need to complete those tasks efficiently, smoothly, and quickly to thrive. As an...
Part One: Benefits of a Peer Advisory Board: Board Members Tell All
Aug. 9, 2021 | Posted by Phil Spensieri
Over the last 15 years, I have dedicated my professional career to helping business owners design and implement strategies with sound, reachable growth and profitability goals. I have worked with...
3 Ways to Successfully Transition Your Business To New Owners
Aug. 5, 2021 | Posted by The Alternative Board
Transitioning your business is one of the most critical and life-changing decisions you'll make as a business owner. If you handle the process well, you will be helping not only yourself, your team,...
Tips on Grooming Your Business Successor
Aug. 2, 2021 | Posted by The Alternative Board
It may not seem possible now, but the day will come when you no longer run your business (either as a CEO or business owner). Recognizing this inevitability is the first step towards selecting and...
What to Tell Your Employees When Selling the Business
Jul. 29, 2021 | Posted by The Alternative Board
Selling a business is often a complicated process. One complicating factor for any CEO or business owner is determining what to tell employees about the pending sale, as well as when and how much....
When It’s Time To Sell Your Business
Jul. 15, 2021 | Posted by The Alternative Board
After all the hard work that goes into starting and maintaining a business, deciding years later to sell that business can be among the biggest challenges in a CEO or business owner’s career. You’re...