Article by: Jeanne Lee of Anytime Collect
Managing invoices and collecting them on time is not an easy job. It requires a significant investment of your time and energy and even then many of your invoices are likely still going beyond terms, being written off as bad debt, or being sent off to a debt collection agency. The debt collection process is complicated and tedious, but there are some surprisingly simple things you can do to become more efficient and significantly more effective when it comes to managing and collecting invoices in your office, here are a few tips to help you get started:
Sending the Invoice
Once the order is placed for your product/service, make it a priority to send the invoice ASAP- the sooner the customer has the invoice the sooner they can process payment. Many times a company takes too long to get the invoice to the customer and by the time the customer receives it, they have a much smaller window of time to process the payment within terms. Making sure your invoice is complete, correct, and properly worded will also help you get paid faster. Dig Deeper: Invoice Design Best Practices
Following Up
How often do you reach out to your customers to ensure invoice receipt? Most companies don’t until the invoice is past due. Maybe the invoice got lost in the mail, did not end up on the right desk, was lost under a stack of papers somewhere, or there is a problem with the invoice and the customer has not spoken up about it yet. A simple phone call 1-2 weeks after you send an invoice can help you do a few things:
- Ensure the customer did in fact receive the invoice.
- Serve as a customer service call- are there any questions or problems with the invoice you can help the customer with?
- Give you an opportunity to remind the customer of the due date and how they can pay you.
Sending reminder emails and making phone calls before the invoice due date, the day it becomes past due, and as it continues to age are also best practices to ensure timely payment, but sending the right message at the right time is a whole new challenge. Dig Deeper: How to Develop A/R Collection Letters, Call Scripts, and Email Templates that Get Results.
Time Management
When it comes to invoice management, there is a lot to be done and not a lot of time to do it; this is especially true of smaller companies who rely on office managers or a small accounting team to manage invoices. In most cases, companies use manual processes like spreadsheets or aging reports that require time consuming steps such as data entry or spreadsheet maintenance to manage invoices, and this is usually the reason they are not getting paid on time.
With these manual processes collectors simply do not have the time to focus on the tasks directly associated with collecting invoices, like sending prompt invoices, ensuring invoice receipt, or talking with customers, because they are too busy with, well…busy work. One of the very best things you can do for your debt collection process is get rid of those disparate systems and arduous manual processes so collectors finally have the time to dedicate to their most important activities- and it’s possible with debt collection software
Debt collection software is highly specialized, yet easy to use software that was designed specifically to help companies manage A/R by putting your most time consuming and tedious processes on auto-pilot so you can become more productive and focused on critical tasks. Does it really work? A 2013 report from PayStream Advisors found that companies who utilize such software realize other significant benefits, such as:
- 20% reduction in DSO;
- 25 % reduction in past due receivables;
- 15- 25% reduction in bad debt reserves;
- ROI in as little as two months.
Automating your processes is not the only way to improve in house debt collections. Anytime Collect has put together other helpful resources and manuals to help you improve the process without implementing software, all of which are available here.
