You're looking to improve your accounts receivable process. What's the best way to do it?

Automating invoicing streamlines processes, reducing human error and saving time. It enhances accuracy, speeds up payment cycles, and provides real-time insights into financial data. However, we need to be careful, the setup costs can be huge and be overwhelming for small enterprises and over-reliance on automation can also reduce adaptability to unique client needs.

One of the most effective way to improve your account receivables is through automation. Use automation tools that minimizes errors,user friendly and above all one that saves time and cost. Invoice automation ensures key data is captured and validated for Customers and produces real time information to the ERP system. This way, meaningful insights can be draw.

Automated invocie generation along with Tariff rate set with cleint wise agreed rate. Integerated Customer wise tariff rates always help to accurate invoice generation and 100% error free.

Accounts Receivables are an asset to the organisation and need to be managed well. An organisation needs to have an a working invoicing and payment system. With the use of an accounting software, debtors ledgers can be easily followed. There is also need for a working debt recovery strategy. The debtors age analysis should be done frequently to make the best suitable decision basing on the situation at hand. There is need to develop of customer loyalty through a one-on-one interaction with customers. Although customers can transact online, there is need to interact with them to create a relationship. Discounts, lay-byes and instalments can be a form of reducing debt. Customers will be motivated to pay in cash and in a short period of time.

Sin duda la facturacion en Mexico se ha convertido en un tema complejo por los requisitos que cada a?o publica el SAT para la correcta emisión de un CFDI, por lo que tener un ERP y un PAC confiables es esencial para lograr una automatización exitosa que permita a las areas de cobranza monetizar en la caja de la empresa las ventas que cierra el area comercial en tiempo y forma, asegurando asi, el cashflow que se necesita para operar de manera saludable un negocio y para invertir en Capex lo cual contribuira al crecimiento y sostenibilidad de la compa?ía

This involve: -Categorizing invoices based on aging, team can pinpoint overdue accounts, enabling proactive engagement. -Customized collection approaches, informed by aging reports, allow for tailored strategies like incentives or structured payment plans. -Continuous process optimization, facilitated by analyzing aging patterns, ensures ongoing efficiency improvements in credit policies and communication protocols, creating a proactive and adaptive accounts receivable framework. -Keep close eye on debtors which has risk to go bad, put them stop trading.

Regular analysis of aging reports helps remind customers to pay their bills. Sending statements of account and soft copies of invoices helps avoid debt provisions. Timely payments allow us to extend credit limits, retain customers, and build trust. For instance, Offering installment plans with post-dated cheques is also beneficial.

An aging report acts as a spotlight on late payments, highlighting: Priorities: Identifies overdue invoices, letting you focus on urgent collections first. Trends: Reveals chronic late payers, allowing for targeted strategies. Risks: Flags potentially uncollectible debts, guiding write-offs and credit adjustments. It's your early warning system for receivables, leading to faster collections and smoother cash flow. An aging report can actually benefit customers in a few ways: Transparency: It can clarify outstanding balances and their age, preventing confusion and disputes. Improved payment terms: Businesses using aging reports effectively may be more willing to offer flexible payment options to responsible customers.

Ensure that all receipts allocations are properly done before generating ageing report. Receipts allocated on a First in first out basis. Arrange receivables with overall large amounts on top ( vertical sorting). Adopt a top to bottom list approach. Highlight amounts on right hand side exceeding 10 days of normal credit days for instance. Inquire with operations whether overdue amounts arise because of disputes relating to product and service delivery.

This covers: Robust Credit Policy: Implement a clear credit policy defining terms, limits, and evaluation criteria. Example: Set balanced credit limits based on customer history to facilitate sales while managing risks. Regular Credit Reviews: Conduct periodic customer credit reviews, adjusting limits based on financial changes. Example: Lower credit limits for financially strained customers to proactively mitigate risks. Transparent Communication: Clearly communicate credit policies internally and externally. Example: Conduct periodic training to align the organization, fostering collaboration with clients and minimizing non-compliance risks. This comprehensive strategy ensures a stable and efficient financial ecosystem.

For accounts receivable to be successful, timing is very important. The invoices and receipt entries need to, on real-time basis be captured in the system and the discipline of knocking off receipts against invoices need to be strictly adhered. Which means we must get a real-time debtors ageing report from the system that allows a timely action. Automation to be used maximum, including sending reminders to customers/ clients. This will bring huge efficiencies in cash flow and also to bottom line by saving on interest of cc limits and many more.

To improve accounts receivable: enhance invoicing practices, automate where possible, state payment terms, offer various payment options, enforce credit policies, use accounting software, fix discrepancies, create a strategic plan for overdue payments, train staff, and review and tweak the process periodically.

Implementing a credit policy is essential for securing our cash flow and avoiding disputes. However, it’s important to treat all customers equally, basing the policy on their past trends and track record with us, rather than their profiles. This ensures fairness and helps maintain a balanced approach. In my perspective, such a strategy not only fosters trust but also encourages consistent and responsible payment behavior from customers.

Ensure clarity and accuracy in implementing payment options: Make sure invoices include all necessary details like contact information, payment terms, and itemized descriptions.

From my perspective, prioritizing a simplified payment option over multiple choices is advantageous. It facilitates easier and potentially faster payments, mitigating issues such as bounced transactions and holding periods common with complex payment gateways. Streamlining the process not only enhances efficiency but also improves customer satisfaction by reducing confusion and delays in payment processing.

Tracking key metrics in accounts receivable (AR) aids decision-making from my perspective. It provides valuable insights into cash flow, customer payment trends, and overall financial health, including monitoring the bad debt ratio. This allows for proactive adjustments and strategic planning to optimize receivables management and minimize financial risk.

Observe trend on left hand side ( columns with credit days from one to 60 credit days), if there is an overdue amount over 60 days and no figure for past three months , it is likely that client has ceased transactions with the organization ; recovery will require more resources as compared with a Client with recurrent figures.

Segment Your Customers - Differentiate your customers based on their payment history, size, and importance to your business Tailor your approach to managing accounts receivable for each segment, focusing more resources on higher-risk or higher-value accounts For example - High-risk customers - Those with a history of late payments may require more frequent and assertive follow-up communications Strategic customers - Key accounts that are critical to your business must receive more personalized service and flexible payment terms to maintain a strong relationship These are few innovative approaches I can think of

Considering outsourcing collection tasks to third-party agencies or specialists who can dedicate more resources and expertise to recover overdue payments effectively and timely.

Monitoring your AR client information and keeping it up-to-date can mean the difference between revenue received on-time and a potential slog to get your company what it's owed. Softwares may perform periodic checks, but it never hurts to double-check client information, yourself, and add another layer of verification.