Step It Up
Accounts receivable is something many companies rarely excel in. Most supply chain execs see it as a necessary evil. What they may not realize is every interaction with a customer provides an opportunity to improve your relationship.
No customer likes to be hounded about payments. But the vendor needs that money to run their business. Supply chain companies must strike the balance of getting paid in a timely manner without spending a lot on collections or hurting relationships. Many available resources highlight the best strategies to get paid quicker, but here are a few ways to improve customer relations at the same time.
Failing to recognize that customers work with other vendors can result in a poor customer experience. As an invoice approaches the due date, vendors typically send out a reminder. But understand that these customers receive numerous similar reminders from different vendors.
Software platforms allow vendors to work together through one bundled payment reminder. The customer can view all invoices in one location, click a quick link to pay each one, ask questions and perform other actions such as file a dispute or apply credits. If there is a question or concern, the vendor is notified and can provide a response. When customers manage several vendors in one location, they can proactively resolve issues rather than setting the invoice aside.
More than DSO
CRMs help company leaders keep tabs on every customer interaction during sales, marketing and account management. But this approach doesn’t usually translate to accounts receivable. Most A/R departments focus only on DSO and the amount of write-offs in a given period. Additional items can and should be tracked, but let’s focus on three customer interaction metrics:
- Staff Accountability – Ensure that your A/R staff is making timely collection calls. Use software to manage the process and create simple follow up workflow rules for the A/R team. Software solutions prompt the team when to follow up and provide management with accountability rules. Without these reports, collection calls will slip through the cracks. Once your team knows you are tracking these metrics, they will be more likely to consistently follow the process and procedures.
- Customer Response Time – The quicker you respond to customer questions, the happier they’ll be and the faster you’ll get paid. Keep tabs on how long your team’s typical response time is when a customer submits a question. Let your staff know you are tracking this and they will respond in a timely manner. Let your customers know you track it and you’ll show you care about addressing their concerns.
- Invoice Accuracy – The best customer service is when the customer doesn’t have to ask a question in the first place. Pride yourself on sending accurate and clear invoices and you will have happy customers. Measure the number of invoices where a customer had to reach out to you with a question or disputed an amount compared to the total number of invoices.
Being able to communicate customer issues internally is a must. Billing problems can arise because of poor communication. If an LTL provider needs to fill a truck, he may offer a discounted rate. If it is not applied when the customer receives the bill, they may not pay on time, waiting for the vendor to call to voice their dispute.
A problem then arises because the A/R employee is unaware of the pricing change. But with A/R technology, the employee can escalate the issue to an executive (including outside accounting) who can reach out and clear up the miscommunication. By assigning tasks to other employees, the A/R team can respond to customer issues and receive payment quicker.
Value Every Interaction
While the A/R department’s main focus is bringing in payments, it is everyone’s job to encourage strong customer relations. Make sure your staff values every customer interaction, even when dealing with a late payment. You’ve carefully managed customers through the sales processes; don’t let a poor collections interaction ruin that positive experience.
The cost of acquiring a new customer is far more than retaining an existing customer. Managing receivables intelligently from a customer-centric perspective will get you paid faster, improve staff efficiency and lead to loyal customers.
Mark Wilson is the Chief Executive Officer of TermSync Inc, a cloud-based accounts receivable platform. Visit ww2.termsync.com for more information.