5 Ways Your Finance Team Can Stay on Top of its Receivables Today
As reported by the International Monetary Fund, the United States is now in the worst economic downturn since the Great Depression. Unemployment, retail sales, economic output and industrial production are all at record numbers. In this time, it is critical for organizations to recognize the severity of the current situation, and to realize it is not just business as usual. Every business must change how they operate now, in order to survive the current economic downturn.
Change can be difficult, and oftentimes organizations struggle knowing where to start. But a good first step any business can take to ensure business continuity is staying on top of receivables. To do this as effectively and as efficiently as possible, here are five tips we’ve gathered from clients as they share what they are doing today to adapt to the everchanging environment.
01. Avoid Clamping Down too Harshly on Your AR
When faced with a crisis, a common first reaction from finance leaders is to lock things down, and to try and collect on all outstanding invoices. But being too aggressive with your customers could drive them away and lose business for your company in the future. The key is consistency; be considerate of the current situation, but also be realistic about your finances too. Communicate to your customers what your expectations are going forward and make clear of any consequences should they not hold up their end of the bargain. Maintain an open line of communication and treat every deal as a partnership.
02. Employ the Carrot and Stick Approach
Successful AR managers are able to find the right balance between the carrot and stick approach and utilize both methods simultaneously to effectively stay on top of their receivables. Our clients recommend pairing positive reinforcements like discounts with negative reinforcements, such as late fees. Here, the goal isn’t to punish your customers, but instead to encourage them to pay in a timely fashion. As was the case with tip #1, your organization must be consistent in its approach. If you’re offering discounts to customers who pay within 10 days, that means 10 days. Ensure both sides have a clear understanding of your expectations, and if in doubt, over communicate until you’re satisfied.
03. Be Flexible
The global environment we find ourselves in today is unlike anything we’ve experienced before, there is no handbook for what we’re current dealing with. We’re all trying to figure things out as they happen. To that end, our clients recommend retaining some level of flexibility in your business processes, so you are better able to support those who are struggling to get by. So long as you are in the cash position to do so, delivering a flexible customer experience in these times can help strengthen your relationships in the long run.
04. Use Technology to Your Advantage
In order for your organization to effectively facilitate the first three tips, you must first ensure you have the right technology in place to do so. A good place to start is with an AR Automation solution that seamlessly integrates with your ERP and streamlines your collections process. The right solution will:
05. Have the Right Capabilities
When choosing your AR solution, look for a platform that provides the following functionality:
Incorporating such a solution into your current business process today will enable your organization to stay on top of its receivables and provide business continuity during these uncertain times.
If you’d like to learn more about how your business can transform today, please contact us directly and we’ll be happy to answer any questions you have.
For helpful resources on working from home in the age of COVID-19, check out our new Resources page!
Katie Canton has been helping companies develop and implement successful social media, content marketing, and marketing communications strategies for more than 10 years. Since joining VersaPay in 2018, she writes on topics such accounts receivables automation, Customer-Centric AR, collections management, and fintech.
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