The American Productivity and Quality Center has been around for years and their main purpose is to help companies learn to create more efficient processes for a more streamlined business. Having been around for 40 years, they are one of the largest authorities when it comes to creating a standard for businesses to benchmark against and follow best practices for a workplace that works smarter and faster.
This organization has created best practices that they believe will have a large impact on the processes of accounts receivable departments. By implementing these accounts receivable process improvement ideas, your organization will be able to work more quickly, while also collecting more money.
BEST PRACTICES FOR ACCOUNTS RECEIVABLE PROCESSES
USE PAYMENT METHODS YOUR CUSTOMERS PREFER
Companies have many different processes for making payments. Some companies cannot make a payment without an invoice, while others will not make a payment until they have received a statement. Further, some companies refuse to make a payment unless the purchase order is attached to the invoice. It’s important to find out how each company makes its payments and to cater to these needs. Without it, you might find that you’re having to reach back out to a company multiple times, sending multiple different attachments to finally get a payment.
PRACTICE CREDIT MANAGEMENT
There really is no point in racking up a ton of new sales if you’re not vetting out your new potential customers for their credit history. If your customers are known for not paying their invoices on time – or at all – it’s likely you won’t ever see a return on the sale you made. By taking a look at your customer’s credit history and trade credit reports, you can come up with a payment plan and credit terms for each customer that ensure you will keep your collections effectiveness index at the top rate.
HAVE A PROCESS FOR INVOICE DISPUTE MANAGEMENT
Your collectors should not be dealing with invoice disputes with no process in place. Invoice disputes should be recorded every time and escalated based on a set plan. Without one, you will see the same disputes coming up repeatedly, but with no insight into why it’s happening. And with every invoice dispute you get, you can expect to get paid later and for less than the original invoice amount.
AUTOMATE YOUR ACCOUNTS RECEIVABLE PROCESS
Spreadsheets and highlighters are never the most efficient or mistake-proof way to deal with your accounts receivable. Spreadsheets leave you open to making a data entry mistake or having multiple spreadsheets with outdated information floating around. Automation eliminates the possibility of data entry errors and helps you complete many other manual tasks that you don’t need on your plate, like typing out email communications or attaching documents.
USE ONLINE BILL PAY OPTIONS
Allow your customers to pay through an online payment portal to decrease the wait time to get paid. Many customers paying via credit card or ACH would much rather go pay the bill on their time, instead of trying to get a hold of you on the phone. Often time, you can send a link to their email and you will find that they pay within five minutes. This also eliminates the issue of customers saying they are missing their invoices or statements, as they can all be located in the payment portal.
TRACK YOUR ACCOUNTS RECEIVABLE KPIS
Changing your accounts receivable process is pretty pointless if you’re not tracking how you’re doing. You will only be able to tell if your efforts are working if you are analyzing your collection effectiveness and past due percentage. Any time you decide to change a process you should be benchmarking your progress to see if it is having a positive impact on your collections department.