When it comes to your Accounts Receivable Department, management is key. Everything needs to be streamlined and efficient so there are no issues. However, managing accounts receivable can be tricky if you don’t follow these five best practices.
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Automate your system
There are various types of programs that can automate your accounts receivable process. Automation makes managing accounts receivable a piece of cake because the more human error you can remove from the process, the better. An automated AR solution is the best ROI you can get because it increases productivity and creates a reliable process.
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Be proactive with collections
The collection process for managing accounts receivable needs to be a priority. Come up with an approach to collections that allows you to intervene on past-due accounts quickly. Don’t wait until weeks or even months have passed before following up. Luckily, if you have an automated system, it will send you notifications when something is past-due. You can even set up the system to create reminders a day before an account needs to be settled. That’s the benefit of automated AR programs, they work for your department’s unique needs.
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Set up electronic billing
Not all companies support this so you may have to do this on a customer-by-customer basis. However, electronic billing saves you time and you won’t be left with stacks and stacks of paper to file away since everything will be stored in your automated AR system. Eventually, all companies will catch on and learn that managing accounts receivable works best when you eliminate paper.
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Shorten your payment terms
Back in the day, there was a billing cycle rule: 30, 60 or 90 days. This was done because most companies paid by cheque that was sent in the mail. Nowadays, with electronic systems, email communications and online corporate banking, businesses can pay the moment they receive your invoice. Instead of giving your customers months to pay, you can accept payment upon receipt. They’ll be willing to pay quickly to close the account on their end. It’s a win-win.
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Keep credit management under control
Any thorough list of best practices for managing accounts receivable will contain a section on credit. You can’t extend a customer’s credit because they ask. Although it may seem like a good idea to keep sales rolling along, this will backfire in the end when the customer’s poor credit bankrupts them and you have to take them to court to receive payment.
To learn more about Accounts Receivable Process Automation, give us a call at 800-719-9621 – or submit a contact form by clicking the ‘Contact’ button below.
