Accounts Receivable Best Practices

Having effective Accounts Receivable management processes, you provide certain conditions that your company has a reliable and stable cash flow for planning purposes and the overall health of your business.

What are best practices of Accounts Receivable Management?

What is Accounts Receivable Management?

Accounts receivable refers to outstanding (unpaid) customer payments owed to your business for products or services provided, and accounts receivable management is the practice of ensuring that your organization receives these payments quickly and reliably. Standard accounts receivable management processes include Billing (advanced Invoicing) and invoicing, communicating with customers, and administering collections and credit policies.

When it’s done right, a business receives timely payments, establishes predictable cash flow, maintains positive relationships with its customers, and makes accounting department productive. But if accounts receivable are poorly managed, a company’s revenue, liquidity, and employee and customer satisfaction are at risk.

Accounts Receivable Best Practices

Many accounts receivable best practices sound like basic common sense.

Today, overburdened accounting teams often lack the time and resources to fully analyze their processes and consider different approaches and methods.

Our best practice recommendations include:

  • Replacing Manual Processes with Automated Accounts Receivable workflows

    Manual accounts receivable processes are slow, difficult to monitor and error prone. By implementing accounts receivable software that allows customers to pay online, you will speed up your transactions, reduce your bookkeeping administrative burden, and automatically track all billing and payment transactions.
  • Establishing clear and consistent billing policies and practices.

    Whether you're using an electronic accounts receivable solution or continuing to run processes manually, it's important to be clear and make sure all accounting staff understand your procedures. This includes standard payment terms, record keeping and collection process.
  • Prompt processing of payments.

    Having consistent accounts receivable practices in place makes it easier to be proactive about payment collection. You can set up a process that will prompt you to follow up with a customer as soon a payment becomes overdue or, if you have a digital accounts receivable solution in place, simply configure your platform to contact a client on the first day a payment is late and send regular follow-up communications until you receive payment.
  • Helping your customers pay quickly and easily.

    If your business regularly struggles with a high rate of overdue accounts, your customers may be having trouble accessing and easily submitting payments for your invoices. With a digital platform that sends clear, easy-to-access invoicing information and allows customers to pay online, you can eliminate these issues.
  • Involving all relevant teams in the process.

    To improve efficiency and avoid redundant work, make sure that all client-facing teams—sales groups, for example—are involved in your accounts receivable practice. Implementing a centralized platform and providing all stakeholders with access is the most effective way to bring all parties together for collaboration in the process.

Electronic invoicing can improve your efficiency of Accounts Receivable Management.

e-Cont.md offers cloud-based accounts receivable management solutions that help companies from different industries get paid faster. In fact, when companies automate their receivables processes, they shorten the service-to-pay cycle by 40 percent to 80 percent.

Interested in learning more about automating your receivables practice from start to finish? Read the Guide Accounts Receivable Automation to learn how and why to automate each component.