Strategies for Shortliners to Keep Cash Flowing

Accounts receivable may be one of the largest assets on the balance sheet, but most manufacturers focus on other areas like LEAN production or sales rather than credit and collections. It is not uncommon for companies to tie up many thousands of dollars in accounts receivable every year.

The November issue of Ag Innovator will take a look at how shortliners can collect their accounts receivable.

Here is an abbreviated version of that article from e2b teknologies, which publishes an accounts receivable software. The company suggests these best practices.

Formulate a plan and policy – The Credit Research Foundation estimates that only 20% of credit departments have a plan in place. This is the first step.

Define goals and success metrics – Without a goal in mind and key performance indicators (KPIs), you will not be able to measure the success of your collection plan. A few examples of common KPIs include reducing average days to pay and decreased cost of credit.

Define dispute resolution process – The mismanagement of disputes can significantly affect business relationships and may jeopardize orders. A dispute resolution plan can help you prepare.

Invoice promptly and correctly –  According to the 2014 Payment Practices Barometer, 29% of late invoices are caused by problems with the invoice itself, such as incorrect or incomplete information.

Be proactive, be in touch – Many customers want to pay you on time, but like all of us, they get busy and forget! Proactively remind customers of due dates; the difference will amaze you.

Standardize your message – One of the easiest things that credit departments can do to improve business processes is to standardize outbound messaging. Develop call scripts, templates for your collections correspondence, and consistent responses to common customer questions.

Involve the sales team – This may sound unorthodox to some organizations, but it makes sense when you think of credit as the beginning of the sales process and collections as the completion of every sale.

Centralize data and information – Centralized data storage and communications is vital to large and small credit departments alike. It ensures the team can effectively manage daily activities and work toward departmental goals.

Process automation – When you rely on manual processes, collectors spend too much time on administrative tasks. Accounts receivable automation software can integrate your ERP system to put accounts receivable and credit collections on auto-pilot.

Learn more: anytimecollect.com. S