AR management is a challenging job sometimes. People don’t pay on time or don’t pay at all. Each person wants to pay a different way: check, cash, credit card. Your customers may even be on different payment plans in terms of interest or due dates.
As collectors, we do our fair share of following up with people about past-due bills. Your goal is to get more payments before you have to turn things over to a team like Professional Recovery Consultants. So here are a few steps for improving your accounts receivable:
- Check your customer data. One of the reasons your AR management team gets a bill back in the mail unpaid is because the address is wrong. Implement a process for asking customers about their contact info each time you interact with them. (Your new client/customer forms should include all of these items.) That way, you can keep up with phone numbers, email addresses, and physical addresses, all of which change often. Make sure it’s someone’s job to take new information or check the database.
- Get the consent you need. Often we work with companies who don’t have the proper forms in place. Your AR management team should implement consent forms for calling customer cell phones as part of the intake process. Make sure you also have a process in place if someone revokes consent.
- Create/update your credit and payment policies. If you don’t already have payment policies, now’s a great time to implement them! Read this list of what to include in your payment policies. Toward the end of a calendar year, you may want to review your plan and make changes effective January 1. Alert customers about the new policy at least a month in advance.
-Some changes you might want to make include shortening payment terms or only billing electronically.
-With credit, your company may have offered generous credit terms in the past to lure more customers. Is it time to change those based on consumer behavior, inflation, higher costs, or some other reason?
- Ask early, ask often. Asking for payment isn’t pleasant, but it’s part of doing business. As part of your payment policy set up, be sure to figure out when and how you’re asking for payment. In some industries, you may ask for half of the fee at the start. In others, full payment is due at the time of service. We recommend at least some portion of payment at the start to maintain your cash flow. If you don’t typically get any payment until later, consider whether that’s causing problems. Teach your team to ask for payment, and here are tips for that.
- Implement a system for billing. By setting up an organized system, you’re more likely to collect. Of course, you have a process in place for mailing or emailing bills. But then what? Create a timetable of when you’ll review past-due accounts and your process for following-up on those. Read our examples here.
- Empower your team. Sometimes, a customer just cannot pay a bill. What can your team members do in this case? Sometimes, your team isn’t explaining things properly. Are they trained well enough? One of our training managers offers valuable insights if this area is a challenge for your company.
Are you making changes to your AR systems for the coming year? Share your thoughts with us on Facebook or Twitter. Or contact us if you’d like to outsource.