Strategies for Optimizing Your Accounts Receivable (Updated for 2018)
While customer-centricity, disruption and innovation continue to be keynote themes at conferences this year, teams across North America continue to power their day to day operations with the same tools and approaches they were using when the Y2K bug was dominating headlines.
Today, I’d like to share some inspiration with you around the topic of optimizing your accounts receivable process, with a focus on the shift in mindset that leading companies are adopting as they prepare their teams to drive an exponentially greater impact on DSO and working capital through 2018 and beyond.
Across industries, leading AR teams are prioritizing the delivery of great experiences, an emphasis on the importance of the customer relationships, and a shift towards working in real-time. Let’s unpack each of those in a bit more detail.
The reality is that the benchmark for great experiences is not being set by B2B organizations today – it’s being set by the B2C brands that have recognized that digital platforms are a primary interface with their customer base, and continue to iterate on ways to create frictionless interactions for their customers. While the accounts receivable process continues to heavily rely on offline touchpoints (printed invoices, mailed cheques, and follow-up phone calls), it’s only a matter of time before processes will need to be reworked to conform to the expectations of your customers. Is your business ready to serve customers that are becoming accustomed to single-click checkouts, same-day shipping, and multiple payment options (many that can be unlocked with a fingerprint!)?
Food for thought: compare your last online shopping experience (and specifically the steps to make payment) with what your customers experience when your invoices come due. How do you stack up?
We operate in a time where the balance of power lies squarely in the hands of customers – fueled by the endless information and reviews online, the cost of switching has never been lower (and the impact of attrition has never been higher). Every customer interaction has a binary outcome – it either strengthens the relationship, or causes it to deteriorate.
In AR, the collections process is one of the most important touchpoints to take a critical look at – realistically, both your cash and your customer are on the line, and the right solution can salvage both. Why is it, then, that task lists (which essentially reward volume) are a cornerstone of this critical outreach? In every task list, there’s a segment of customers that will pay once they receive a reminder, and a segment of customers that require a deeper level of interaction to get to resolution. Leading companies have recognized the opportunity here, and are allowing their teams to focus on the customer relationships that need a deeper conversation, without bogging them down rushing to complete task and call lists.
Food for thought: What would your results look like if you automated the outreach to the 80% of your customers that will pay after receiving a reminder, so that your team could focus on finding a solution with the remaining 20% of the customer base who can’t (or won’t) pay?
In 2018, there’s no good reason for any team to be working with data that is stale. Full stop. If your AR tools of the trade are spreadsheets, macros, and formulas you are leaving significant opportunity on the table (and exposing your organization to major risk). How often does your team find themselves apologizing and clarifying to customers that their payment was, in fact, received – but the notification went out because the data they were working off was a few days old? Referring back to points #1 and #2, these are the types of issues that deteriorate customer trust. In an age where systems are built for connectivity and interoperability, you should have an expectation that your systems of record communicate – and communicate in real-time. (I’ve yet to see a spreadsheet that is able to do so in a stable and predictable manner).
Food for thought: How would access to real-time aging, payment data and customer history change the way your team interacts with each other, and with your customers?
If you came here today looking for quick fixes, I have to apologize – shifting mindsets and managing change are two of the biggest challenges that businesses face as they modernize operations. However, these are the cornerstone strategies for optimizing and improving your accounts receivable process in 2018.
At VersaPay, we view ourselves as agents of change in AR – and love working with companies to help optimize their AR to get paid faster, all while delivering a better experience for their teams and customers. If you ever want some help unpacking the concepts (or thought starters) in this article, we’re here for you!
Dan Van Meer
May 14th, 2018
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