Accounts receivable (or AR) play a crucial role in a business’s financial health. It’s the way money enters the business, and if mishandled or delayed, it can lead to financial strain and hardship. Efficiently managing accounts receivable for clients is crucial for financial roles, including accountants, CFOs, and bookkeepers. This blog post will delve into tips and actionable strategies accountants can quickly implement to optimize their accounts receivable management. Say goodbye to late payments and manual reconciliation and hello to improved cash flow management and streamlined payment process with Forwardly– enabled with RTP®.
Streamline wherever possible
It’s the 21st century, and you are missing out if you aren’t leveraging technology to streamline your AR. It’s critical for accountants to choose tools and software to help automate invoicing and payment reminders, which improves efficiency and reduces manual errors. In fact, 91% of CFOs say that accelerating payment digitization has made their payment operations more efficient. Apps like Forwardly help accountants easily send clear, professional invoices for prompt payment. Setting clear payment terms and due dates is also important to encourage timely payments. Other things that can help include making clients’ invoices easy to understand by listing all charges accurately, clearly, and most importantly: saying thank you!
Know your customers
A crucial aspect of managing accounts receivable is knowing your customers. Establishing credit policies tailored to your business’s needs is critical for positively managing accounts receivable. Assess and verify customers’ creditworthiness using credit checks and other evaluation methods. Then, armed with greater knowledge, you can set appropriate payment timelines per customer. This proactive approach minimizes the risk of lateness or non-payments, especially with potential high-risk clients.
Stay in touch
Proactively maintaining open lines of communication with clients is key. Most businesses are sitting on an average of $84,000 of unpaid invoices. In fact, studies show that 49% of invoices created by businesses in the USA go on to become overdue. By staying in touch with clients, accountants significantly improve cash flow and reduce late payments. Try using personalized phone calls or tactful email reminders to create positive reinforcement. Don’t forget to include “thank you” or gratitude throughout your communication, even when dealing with uncomfortable invoicing conversations. By nurturing these relationships, accountants can foster positive client AR interaction.
Handle disputes with care
Let’s admit it. Nobody relishes the task of managing accounts receivable disputes. Resolving payment disputes and handling overdue invoices demand finesse. It’s no wonder unpaid invoices across the USA are sitting at an estimated $825 billion! So having practical techniques or methods in your back pocket for navigating challenging situations for effective negotiation and conflict resolution can help expedite disputes and enforce a positive client experience. Developing a collection strategy, including follow-up emails and timelines for addressing disputes, will help preserve customer relationships. Lastly, consider picking up the phone and personally calling your clients. This could help evaluate tension and address customers to feel heard.
If you are struggling with AR, consider incentivizing early payments and offering flexible payment plans to facilitate prompt settlements. But keep in mind that you might want to raise prices if you do choose to offer an early payment discount – after all, offering a discount of 1% for paying 20 days early equates to an annual interest rate of approximately 18%. Unless you are eager for cash in hand, it might make more sense to find other ways to promote on-time payments.
Use the best tools
There are endless tools, software, and apps that offer endless options when it comes to accounts payable. Forwardly is specifically designed to streamline accounts receivable management, helping accountants get paid three days earlier with instant payments. With one click, you can send payments within seconds, 24/7/365, without worrying about ambiguous bank hours. With QuickBooks Online integration or Xero integration, you can streamline the online payment experience for your clients. Gone are the days of slow and long waits for payments. Using apps like Forwardly can automate processes, improve accuracy, and help you gain better insights into your accounts receivable.
Become an AR champion
Effectively managing accounts receivable is essential for accountants seeking to optimize cash flow and foster strong client relationships. Leverage technology and utilize tools to foster a robust client experience. Implementing these tips and best practices can enhance your financial operations, minimize late payments, and ensure a stronger financial.
Ready to take your accounts receivable management to the next level? Start thinking Forwardly and sign up today.