Are you making any of these accounts receivable mistakes?
You’re insanely busy running your business with a list of tasks as long as your arm. Among your most important tasks is managing your accounts receivable efficiently. But sometimes, bad habits in your A/R management process can turn into a huge mess.
If you’re routinely making one or more of the following mistakes, you’re sabotaging your business! But don’t fret! The good news is that you can turn things around starting today! Identifying the problem is the first step to making changes toward a more efficient process. Don’t be guilty of …
Lack of Organization – If your method of filing and keeping track of information is jotting notes on random pieces of paper you keep in stacks on your desk, shame on you! Without a proper system to house detailed notes, dates and records of communication, neither you nor your employees can accurately communicate with your customers. An accounts receivable management system is a must! You need your customer information housed in one location in order to streamline!
Making Careless Mistakes – Your invoices and statements have to be perfect every time. When your customer spots an error, the most likely response is to put the invoice or statement aside to tackle at another time. Worse yet, your customer can become combative and distrustful. Either way, your payment will be delayed until the error is corrected. Keeping accurate records is a trust-builder and communicates to your customer that you’re on top of things and you expect him to be on top of things, too.
Procrastination – Sending out invoices late can send a message to your customer that you’re okay with lateness. Waiting too long to follow up on late pays can communicate that a past due invoice isn’t all that important to you. Turn this around by sticking to a pre-determined schedule for sending invoices and statements and for follow-up letters and phone calls. If you’re unsure when to call or when to write your customer, check out our recommended debt collections timeline to help keep your communications on track.
Neglecting the Power of the Telephone – We’ve never met a customer yet who loves making a collection call. But neglecting the power of person-to-person communication can really take its toll on your past due account status. The thing is – collection calls aren’t all that bad if you have a good call script in front of you! Rehearse it a couple of times then pick up the telephone. And keep this in mind; most of the customers you call would probably love nothing more than to pay you and when approached with a helpful attitude, most customers will respond positively. Ultimately, the telephone still rules when collecting past dues.
No Online Payment Methods – Technology is king and simplicity rules. If you don’t have an online payment option, you’re slowing the process down. Online payment options keep the payment process quick and easy for your customers, and when things are quick and easy, customers are more likely to pay on time.
Relying on Memory – It’s surprising the number of people who don’t take notes during a debt collection conversation, even though there are so many smart reasons to do so! This is especially true if you end up in a dispute with your customer that lands you in court. Time stamped notes become your timeline! Effective note taking is key!
Not Exacting Consequences for Late Payments – You’re a nice person. You want to give good customers a break. But the fact is, if paying late is okay with you, then you’ll get paid late. By incorporating a late payment fee into your credit policy, for example, you can communicate right up front that you mean business about payments. Don’t hesitate to go back over your credit policies with late pays to remind them of the agreement they entered into with you.
Misplaced Priorities – We know … we understand. When you run a business, everything is priority. However, you won’t have a business at all if customers don’t pay you for your products or services. Therefore, you must do what you must to move your accounts receivables management to the top of your list.
Changing just one bad habit can make all the difference!