5 Strategies for Optimizing Accounts Receivable | Ungerboeck

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5 Strategies for Optimizing Accounts Receivable

Customer billing and collections are the lifeblood of every business. Efficiency in this area gives organizations more resources to deliver more services that bring in yet more revenue. It is also an opportunity to leave a lasting impression on your customers by defining their experience with your company and influencing their willingness to do business with you in the future.

With many events businesses now challenged to do more work with less staff, and customers increasingly expecting automated, contactless interactions, let’s review five highly effective strategies to streamline accounts receivable operations.

1. Go Digital

We’re living in the digital age, and your invoicing processes should be too. Over the past few years, we’ve seen the importance of cash flow brought under the spotlight. Every day spent waiting for payment can make a difference in your cash flow, so it’s important that invoices are paid on time. Sending invoices electronically means they’re instantly placed in the inbox of the person marked to receive them – not floating around the office in piles of documents, waiting to be noticed. You’ve got a digital record that they’ve been sent, easily referenced if any questions arise.

Most estimates put the administrative cost savings of switching to digital invoices at upwards of 75%, and even higher if full invoice processing automation is put in place. Goodbye to paper folding and envelope licking! And speaking of paper, the environmental benefits of moving to electronic delivery methods are also clear. Digital invoices eliminate paper waste, printer ink, and the impact of transportation.

This is not a new or revolutionary idea. In fact, many countries are now introducing “e-invoicing”, the next evolution of the invoicing process. E-invoicing replaces standard PDF or similar invoice formats with a structured XML file sent across a centralized network. The file can then be processed easily and accurately by accounting software packages. If you’re still printing and mailing your invoices, it’s past time to get moving on doing it electronically.

2. Personalize Your Communications

There’s a special place in spam filters for emails like this:

“Hi, please pay your outstanding balance using the link below.”

That place is known as the Junk folder. It’s important when sending invoices or follow up emails that they contain personalized information such as contact and account names, invoice number, amount due, event details, and the name of the contact at your organization. Including these details makes it less likely that your emails will end up in Junk folders.

But having said that, you also don’t want to waste all the time you’ve saved by going digital on writing thousands of manually personalized emails. Making use of software with mass-send capabilities and email merge templates is the way to do this efficiently and accurately, giving you the same personalized outcome without the manual effort.

3. Offer Self-Service Tools

When it comes to ensuring your customers have the easiest way to pay, it’s important that their access to invoices, orders, and payment history is also simple. Not only does this give your customers confidence, but it also means less time spent by your staff on responding to phone calls and emails to request information that could be available in an online portal.

This is especially pertinent when you consider that millennials are increasingly taking the lead in the day-to-day workings of the events industry. Millennials are digital natives and totally in their element, with a login to every website known to mankind – and most likely a password manager keeping track of them all. The idea of having to send an email or, God forbid, make a phone call to request information that could be accessible online is almost an unforgivable sin. The solution is simple: Give your customers secure online access to information in your invoicing and collections processes.

4. Make Payments Effortless

When reviewing your AR process, make sure to not to overlook that final, critical step: How customers actually pay.

As with e-invoicing, electronic payments can dramatically lower administrative costs, reduce late payments, and support sustainability initiatives. Yet electronic payments can also improve payment accuracy by ensuring customers pay exact amounts due and providing real-time visibility into payment statuses while payments are processing.

Payment choice and simple payment forms with clear error messages are commonplace in our personal lives. Your customers expect the same with their business payments. An intuitive payment experience fosters confidence in payment security and billing accuracy and contributes toward your overall customer experience and brand perception. For ad hoc orders, simple payment processes directly support increased purchase frequency and customer engagement.

The way customers pay should also support your business objectives. Incorporating the cost of payment acceptance into the price of your services is the most customer-friendly approach. But if you find it necessary to add a convenience fee, surcharge, or other similar line item to your invoices, it should be clearly communicated to your customers and comply with your local regulations. No one is ever happy to pay these fees, but there are steps you can take to optimize the implementation.

5. Work as a Team

It’s not just your finance team that benefits from collecting outstanding debts; it’s the whole organization. So why should the finance team be the holders of all knowledge and responsibility in this area?

You can easily increase your interactions and contact points simply by providing visibility to other team members of the status of client accounts. Sales representatives and event managers, for example, also have a vested interest in debts being collected and should be aware if a client hasn’t been paying their bills. Providing access to the information they need whenever they need it will help accelerate your debt payments.

If the only way to access this information is to contact the finance department or from a monthly statement, then no one is empowered to have confident and informed conversations with their customers. The sole responsibility will continue to fall back on the finance team, who often don’t have a personal connection to the customer unless they are frequently overdue or have a long-overdue debt. Success is a team game, and we need to be sure we’re giving our teams the tools they need to contribute to their organizational success.

These five strategies will go far in optimizing your accounts receivable processes. A modern and simple system offers the type of high-level service your customers will remember and come back for again and again.