It’s no secret managing accounts receivable is a big task for any business. Big businesses have more accounts to deal with. Small businesses may not have the expansive team or technology they need to deal with accounts receivable efficiently.
No matter the situation you’re facing, you want to know what you can do to manage accounts receivable more efficiently. Follow these tips and you’ll be a pro at accounts receivable management in no time!
Create a Solid Credit Policy
If you’ve been managing your accounts receivable without a credit policy, it’s time to create one. If you have a policy in place, it’s probably a good time to review it.
How do you assess customers who apply for an account with your company? Do you approve everyone and anyone or are you more selective? Credit is probably the one area where it pays to be picky! Revise your credit policy to include instructions about qualifying a customer for an account.
Your credit policy should also include information about how accounts are to be collected and when they should be declared bad debt. The policy should lay down the law about other aspects of accounts receivable: early payment discounts, late payment penalties, and even the text for reminder notifications.
Adopt New Technology
Few companies invest heavily in the technology they use to manage accounts receivable. Many smaller businesses use the basic features of the accounting software they’ve adopted, such as QuickBooks or another program.
Not all technology is created equal, however. Upgrading your systems and programs could help you manage accounts receivable more effectively. Newer technologies allow you to do things like automate reminder messages to send out to your customers. They’ll also do a better job of tracking who has paid and who hasn’t.
If you find yourself too busy to manage accounts receivable effectively, technology might just be your best friend!
How much incentive do your customers have to pay their bills early? If the answer is “none at all,” you could be managing accounts receivable more efficiently by adopting an early payment incentive.
Many companies forego this step, believing it will cost them too much. However, offering an early payment discount doesn’t cost much, and it works. Your customers will be much more likely to pay you on time or even early.
Get a Helping Hand
At some point, you may have to confront the fact you’re just too busy to manage accounts receivable efficiently. Whether you’re falling behind on invoicing because you’re busy finalizing the budget for the upcoming year or your accounts receivable team can’t keep up with an influx of new customers and accounts, you’ll eventually have to consider getting some help.
Some businesses will hire in-house and keep their operations within the office. Expanding your accounts receivable team is always an option, and it’s a good one for many companies. Be sure to train new hires well.
Another way to get help is to team up with an outsourcer. Many providers can help you expand your accounts receivable team quickly, as well as give you access to the latest technology and help you use the best practices to manage accounts receivable. In some cases, they can even help you create a more effective credit policy!
Outsourcers focus on saving time and money by using their expertise to complete tasks more efficiently.
The Right Path for You
Each business will discover a unique solution for its unique situation. Review the tips here and see what you could be doing differently. If you’re still looking for ways to become even more effective at managing your accounts receivable, talk to the experts today.