A Guide to More Effective Accounts Receivable Management Techniques

Managing Accounts Receivable

Accounts receivable is a vital part of your business’s fiscal ecosystem. And it’s easy to see why – it’s effectively the ‘money-in’ side of your transactions. It’s a given, then, that your accounts receivable department must operate like a well-oiled machine – after all, it’s the department that manages your bread and butter.

We’re sure yours runs smoothly, and you have ample sight of the money coming into your business. But it never hurts to brush up on more ways to manage accounts receivable.

So here are some top tips on managing accounts receivables for better efficiency, and efficacy, in your money-in processes.

Develop a system for tracking customer payments

And you can do this by establishing a clear process in billing, and that process should include:

  • Billing periods
  • Invoice and payment dates
  • Collection procedures for any overdue payments
  • Billing contact information by client
  • Steps on how to pay
  • Any additional notes for your client

Establish credit limits and payment terms for customers

Your credit policies should be crystal clear, if you have them. Set them ahead of time to avoid too much credit extension per client, and ensure your greater business understands your policies, so that they can use discretion when a client requests credit.

Have a collections policy in place in case of non-payment

Overdue payments then, must be proactively addressed and the process of collection must be streamlined. Within the collection policy should be a windowed time set aside to review the accounts payable status, and the steps your business has in place – from notification to legal measures – in making sure payment is collected.

Follow up on late or delinquent payments

Your follow-ups on late payments should stay proactive throughout the late period, so that clients are constantly reminded of the outstanding payment. A good routine to establish is to contact the client on the first overdue day, so that there can never be a question on whether notification was given on an overdue account. 

Automate it all

That’s right – every single step in this journey can be fully automated with a world-class accounting automation add-on, like DOKKA. And what automation introduces to your accounts receivable process, is consistency, accuracy and efficiency. So, with DOKKA’s automated triggers, you can set up an email for invoicing, an automated thank you email for payments received, and notifications on all overdue payments going to internal stakeholders, and the clients that need to see them. 

Remember, the majority of payment issues that arise monthly, are because of clients not receiving timeous invoices, or not at all. Sometimes clients don’t really understand the invoicing system, though, and that can hinder prompt payment too. It stands to reason, then, that the best solution to all of these points is to migrate processes to DOKKA’s cloud-based accounting automation system. Integration is quick and simple, and your business and clients can enjoy effective accounts receivable management techniques that are more accurate, more efficient, and always timeous.

Click here to request a callback.

Share this post