Accounts receivables (AR) help in improving the cash position and cash flow in the business. Therefore it is imperative to pay attention to improve accounts receivable process. The accounts receivables act as an asset for all businesses. But, it is important to collect payments from customers before the deadline. Otherwise, the outstanding invoices of accounts receivable will affect the growth of the business.
Thus, you should continuously lookout for different ways to optimize the accounts receivable collection process. By adopting the methodical approach, you can easily implement the required changes and improve the AR collection process. It is recommended that you should download and install ar management software to make the payment process simple and easy. In the free version you will get all the basic features and for more advanced features you can go with the premium one.
Here, in this blog post, we are going to discuss various different ways to improve the AR collection process. These techniques will not only increase the AR collection process but also offer various enticing benefits to your business:
1. Get Rid Of Obstacles
You should try to determine various obstacles on the way and try to get rid of them. Usually, customers find a problem in the old method of making payments. In our busy lifestyle, people do not get time to make payment through cash. Therefore, all business owners should provide online ways to allow customers to make payments through convenient ways. Along with online payment there should also be an option for making payment through cash. Some old customers find it convenient to make payments through cash. You can get rid of various obstacles in the AR collection process by installing free accounts receivable software like Troveworks. This software keeps a track of payments and thus makes it easy to manage accounts payable and receivables.
2. Pay Attention To Credit Management
You should not offer the products and services to those customers who always delay in making a payment or who never pay at all. Extending credit willy-nilly to these kinds of customers will never help in growing your business. Also, it affects the AR collection process and decreases the business profits. You should avoid extending credit to those customers who affect the AR collection process. Also, before extending credit to the new customers you must check their credit history. The optimum credit management process can help in improving the AR collection technique.
3. Regularly Assess Accounts Receivable
Another good way for improving the AR collection process is by creating a specific schedule for assessing and monitoring the current status of accounts receivables. The frequent assessment of accounts receivables can help in reducing the number of errors. If you will find the errors quickly then you can quickly solve them. Regular assessment of accounts receivables will help in reducing the number of problems in the business. The free accounting software can help in maintaining and regularly assessing the accounting records.
4. Shortening of Payment Terms
It is not mandatory to provide 30 days to customers for paying the due amount. Sometimes, a shorter payment time can help in collecting payments quickly. Thus, shortening of payment terms can help in speeding up the accounts receivable process. These things should be clearly mentioned in the invoice given to the customer.
5. Create Billing Dispute Resolution Technique
You should create specific guidelines for handling various billing disputes. These rules and regulations will help in streamlining the entire process. Also, these policies can help in improving overall customer satisfaction. It is so because these rules will guide your accounting team when a dispute will arise.
6. Automate Accounting Process
With the growth in technology, different automated accounting solutions are available in the market. These accounting solutions will not just improve the AR collection management process, but also help in reducing the burden on the accounting staff and AR teams. Installing automated ar software can speed up your collection process by automatically generating invoices, making payment reminders to your customers and sending emails. This kind of software also helps in reducing human errors and reduces the probability of losses and disputes. Therefore, all business owners should consider installing automated free collection management software in their accounting system.
7. Create A Proactive Collections Process
You should create a proactive collection process and make sure that this process is clear. There should be no ambiguity in the AR collection process. In an ideal situation, you should set an objective to intervene early. If any customers pass the due date and do not make payment then the accounting professionals should follow the guidelines of the company. Mention all payment terms clearly to your customers. You can send a notification or reminder to the customers who have not cleared due payments. This can be either a collection letter or dunning letter.
8. Electronic Billing System
You should start billing your customers electronically to speed up the accounts receivable collection process. Most companies have started incorporating electronic invoices and payment systems. Electronic invoices can be sent instantly. If customers receive invoices quickly then they will start making payments as soon as possible. Thus, all business owners should consider sending electronic invoices to their customers and observe the changes in the AR collection process. You should consider the installation of receivables management software to send e-invoices to your customers and maintaining their records.