If your Accounts Receivable department is struggling to achieve payment from clients, you need to find a solution quickly. Problems in your AR department can quickly snowball and start to affect the rest of your business – after all, it’s where your money is coming from at the end of the day.
While some tips for improving your invoicing strategy may seem obvious, there are many more subtle ways that you can streamline the AR department and speed up the process of collecting paid invoices without damaging crucial client relationships. It’s a delicate balance when asking trusted clients for cash!
With this in mind, here we offer our five tips for improving your accounts receivable management.
Use Automated AR Software
There is so much automated AR and invoicing software on the market, and for good reason – it takes a lot of the awkwardness out of demanding invoice payment. For instance, accounts receivable software from Versapay is able to integrate payments and automate late payment reminders, making your reminders seem less threatening because they’re coming from a system rather than a person at your company.
There are also lots of repetitive data entry tasks in the AR department, and using automated software to fill in these blanks can help to speed up the overall invoice collection process for the human team.
Offer Multiple Payment Options
If you’re an old-school company that only accepts checks from clients, you might want to think about joining the 21st century before your clients go elsewhere.
Modern businesses give their clients the opportunity to pay via check, credit card, ACH, EFT, PayPal and more. Some clients are more easily able to pay through one form of payment than another depending on how their business runs, so allow them the freedom to pay you in a convenient way for their own system.
Give Discounts on Fast Payments
You don’t need to do this, but many AR departments now offer discounts to clients for fast, on-time payments. While you take a small financial hit, it incentivizes the client to pay your invoices quickly and on time, helping them to save a small amount of money.
This may seem counter-intuitive, but once you factor in the paid man-hours that AR team members may spend tracking down invoices, it’s actually a sensible decision and very cost-effective in the long run.
Offer Payment Plans to Loyal Clients
If your client is struggling to pay in full due to a temporary lack of funds, try to meet them halfway by offering a payment plan for the rest of the money.
Whether you apply interest or not, this allows your client to spread the cost of their debt to you over a longer period of time, fostering an image of understanding and compassion that will further your relationship.
Consider Outsourcing Some AR Work
If all else fails, it may be time to outsource your AR work to a cheaper labor force overseas.
While this isn’t ideal, it frees up your on-site AR department up to get on with more pressing matters while the outsourced team can chase up old invoices and start to reduce any backlog that’s holding your company back.
This is a great way to get all caught up on your invoices so that the regular AR team can get ahead of the curve.
From invoice outsourcing to AR specialized software, we hope you enjoyed these tips for improving your accounts receivable management!
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