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5 Ways to Better Manage Your Accounts Receivable Team

Better managing the accounts receivables team will help streamline business pr

Do you take your accounts receivable team for granted? As a critical team in your company - without it, your business wouldn't get paid - AR can easily fall under the radar. However, it's an area of the business that if it isn't being watched carefully, and its processes aren't questioned periodically, can lead to ballooning past-due accounts as clients use your company's goodwill as their own cash-flow management tool.

Indeed this area of the company comes up frequently as a topic of discussion on the Ask & Share section of the Proformative site when members try to enhance their internal processes bring money in the door. Here are areas to consider for better managing your AR team:

1. Determine if technological processes are the most efficient. 
Businesses can get stuck in a rut, especially if they are comfortable with the software or programs they've used for years. But just because your team is well-versed with a certain system, that doesn't mean it's the most efficient solution. Investigate other possibilities, as advancements like activity-based billing models are quickly gaining popularity and could prove an effective alternative to your current system.

2. Create strict policies if they aren't already in place.
If your team hasn't previously had a policy on dealing with past-due accounts, it's time to implement one to be more consistent in how the company treats clients when their bills are past due. Even better, take another look at how your company determines your clients' creditworthiness, and whether your company has become too lax in giving those with higher credit risk extensions after extensions. By setting clear boundaries, team members will be less likely to give unexplained extensions to late payers or fail to follow up on past due accounts. If you notice such problems, they need to be addressed immediately.

3. Track all communications.
Proformative member Daniel Poirier, CFO at Pro Tech International, suggests keeping an eye on communications with clients is one way for executives to effectively oversee their accounts receivable teams. It can prove greatly beneficial to tracking account information and handling any billing errors, missing payments or account discrepancies. "I would include, at a minimum, the following information on every call: date, time, name and title of the person spoken to and the exact details of every conversation," he wrote.

4. Note delinquencies quickly.
Even though it's your team's job to remain up to date on past due bills, it's just as important for you to be aware of any issues, particularly if the client in question is a repeat offender. Jim Schwartz, corporate financial advisor at Wabash Financial Strategies, recommends getting even more team members involved to ensure the delinquent account won't impact overall profitability. "Alert/enlist help from sales, executive management and others, as this is an issue of customer profitability for your firm," he wrote. "Once an account goes over 60 days, probability of full collection starts to drop dramatically." 

5. Build strong relationships with clients.
Many Proformative members believe creating strong bonds with clients is a critical way to enhance oversight of an accounts receivables team. Having good relationships with those your company does business with will not only strengthen its ability to increase sales, but gives your company more leverage when it comes to collecting payments. This may allow you to more easily reach those in charge when you notice an account is past due. Developing these relationships will also ensure you're aware of any account-related quirks, an important aspect of correctly managing and helping your team handle billing appropriately.