Finance executives focus on improving high level and often very technical issues, while ignoring basic functions--like getting paid on time. Accounts receivable (A/R) is something companies take for granted but rarely excel at. There is a deep respect in the financial community for the financial underpinnings that can elevate a business to success.
Shoring up a company with sound financials and processes is often the most constructive thing you can do for an enterprise. Let's face it: getting customers to pay invoices is often the least enjoyable part of running a business. While executives tend to look at collections as a necessary evil, what they don't fully grasp is that every interaction with a customer--even after the product has been shipped--provides an opportunity to improve the company's relationship with the customer.
But if done incorrectly, it can also ruin the relationship. No customer wants to be constantly hounded with the "please pay us" email or phone call, no one can effectively run a business while permitting customers to take advantage of its credit terms.
A sale is not complete until the company actually gets paid, and in today's competitive business-to-business market, it is about more than just chasing customers clown for payment. Companies must strike that perfect balance of getting paid in a timely manner without spending on collections and more importantly without hurting the customer relationship.
There are many resources available that highlight the best strategies to getting paid quicker, but here are a few ways to improve customer relations at the same time.
Customers Have Other Vendors Too
Failing to acknowledge that customers are working with several other vendors is one of the biggest mistakes a chief financial officer (CFO) can make when it comes to accounts receivable. As an invoice approaches the due date, vendors typically send out a reminder to the customer. This would be effective if the customer only had a few invoices from a few vendors.
In reality, they have dozens and sometimes hundreds of open invoices from different vendors sending similar reminders.
Worse yet, many of the reminders are simply a statement and do not provide a way for customers to perform actions such as pay the invoice or file a dispute. Thus, customers are left with an inbox full of reminders leaving them overwhelmed, annoyed and not responsive to any one vendor.
There are software platforms that allow vendors to work together...