As providers for a cloud-based A/R management solution, we've started to notice a pattern. Although no single company we serve is the same and each of them utilizes our solution in different ways, there are a set common obstacles that they will likely run into. Below we've listed the 6 biggest issues in A/R Management.
1. DATA MANAGEMENT
When we ask companies what they currently use to manage their A/R, many of them still do all of their work in outdated Excel spreadsheets, CRM data, or Aging Reports. In today's business environment, it is important to understand and take advantage of technological advancements that will not only make your employee's lives easier but also reduce the risks associated with errors.
2. INVOICES AND STATEMENTS
It's been said that transactional documents are the lifeblood of a business. Simply put, without paid invoices and/or statements your company will make no revenue. The majority of your customers want to pay their invoice or statement in a timely manner, however, some problems can occur that make it impossible for you to receive money owed to you. Your invoices/statements could be sent to the wrong address, the billable rate or freight rate could be incorrect, your customer could be tax exempt, or your transactional documents could be missing the purchase order entirely.
3. STAFFING AND EMPLOYEES
This is an issue many companies face, regardless of the industry that they work in. It is important to understand that your staff is the oil that keeps the engine running and if they aren't motivated to work, nothing will get done. If this happens, you'll either need to find unique ways to keep them motivated or find new solutions that make their job more manageable. Keep in mind that your Accounts Receivables is most likely your second biggest account so managing it must be on the top of your accounting priority list.
It is important to realize that your customers are human too and they are likely to pay their invoices or statements on their own time. That being said, it is important for you to give your customers enough time to pay their transactional documents. If you send an invoice or statement in the middle of the month to your customer, you are only giving them two weeks to pay you.
5. PAYMENT METHOD
If you are only offering only one payment option to your customers, it's making it difficult for them to pay you. In today's marketplace, there are thousands of ways customers can make payments, the cash-only option is now extremely inconvenient. If you hate it when there are few options to purchase an item you desire, think how hard it is for your clients to purchase your items. It is important to be malleable and offer multiple different ways to pay.
6. BAD CLIENTS
This is especially important if you are a business-to-business company. We've all had clients that are unresponsive, inconsistent, and don't ever pay their invoices or statements on time. Although they supply you with revenue, consider how much time and internal money is wasted trying to track their payment. Eventually, it's better to do away with these types of clients because it's likely that they are replaceable.
If you are having a hard time finding your what the biggest issues are with your A/R Management, you should consider the 6 areas we've listed and brainstorm them in more detail with your internal team. List them out on a whiteboard or big piece of paper and give detailed reasoning as to why underneath each one.