You have a business; you need cash. If your Accounts receivable are skyrocketing, you are bleeding cash, plain and simple. If you are bleeding cash, you are in big trouble. But fear not; find yourself a good team of Accounts…
February 27, 2024 
You have a business; you need cash. If your Accounts receivable are skyrocketing, you are bleeding cash, plain and simple. If you are bleeding cash, you are in big trouble. But fear not; find yourself a good team of Accounts Receivable managers, and they will triumph and save your finances. They are your cash flow protectors and heroes. We often neglect this vital role, yet managing accounts receivable demands ambitious, goal-driven individuals. Recruiting the right Accounts Receivable manager might be the soundest investment for your company’s future. Stay put for our definitive guide to Accounts Receivable Manager jobs and Accounts Receivable manager services.
Accounts receivable are payments due to your company for services or products already supplied. A good accounts receivable management ensures these payments are made on time, consistently and reliably. Suppose your company doesn’t manage its collections effectively, and there’s a widespread and persistent problem of overdue payments. In that case, you risk not having enough cash to pay essential transactions such as salaries, purchases and dividends.
Accounts receivable management encompasses several different processes. It includes credit granting, customer relations, invoicing, monitoring and analysing payment trends, and collecting and reconciling payments received.
Because of its scope, good accounts receivable management services can impact the business in many ways.
– The most obvious of these is the reduction of bad debts. No company wants to be burdened with too many unpaid invoices or overdue payments. Having sound, reliable payments from customers ensures that you will have sufficient cash flow to finance the ongoing needs of your business. According to research by the FSB, every year, 50,000 businesses are pushed into bankrupcy in the UK as a direct result of late invoice payments.
– An efficient Accounts receivable management will help your staff focus on the critical, high-value work that supports your bottom line.
– A well-managed accounts receivable management program fosters good customer relations and your company’s reputation. Good accounts receivable management maintains healthy customer relationships and strengthens your company’s reputation. Poor customer relations could harm your company’s customer loyalty and its ability to close good business in the future.
– Finally, the strength of your accounts receivable management program can impact your investor relations and your ability to grow. Cash flow can impact your balance sheet and bottom line. Investors and lenders assess your company’s financial health through effective AR management and payment history.
How to be an outstanding accounts receivable manager? By maintaining the subtle balance between chasing and nurturing your customers. The Accounts receivable managers have a very tricky position when chasing overdue payments from customers. They must contact them to settle their debts as quickly as possible. With the Credit Manager and the Head of Litigation, they try to ease tensions and settle the company’s commercial disputes and litigation as best they can. Sometimes, this may mean negotiating with customers in difficult financial situations.
Accounts Receivable managers must act in a way that does not harm the trust and the relationship between a customer and the business.
Embracing omnichannel communication is essential as it allows the manager to engage with clients seamlessly across various platforms, ensuring accessibility and convenience for all parties involved. Moreover, personalized communication is paramount in cultivating trust and loyalty. By tailoring interactions to individual client preferences and needs, the manager demonstrates a commitment to understanding and addressing specific concerns, thereby enhancing overall client satisfaction and facilitating smoother transactions. In essence, combining omnichannel communication with personalized approaches equips Accounts Receivable managers with the tools necessary to navigate the complexities of modern business, fostering stronger client connections and driving organizational success. Research by McKinsey proved most late payers prefer digital channels communication, except among older cohorts who enjoy traditional contact through letters and telephone. debt. It really depends on the customers, and adapting to them can make the biggest difference.
Addressing late-paying customers in a friendly and personalized manner is crucial for an Accounts Receivable manager. It helps to ensure a positive relationship with the customer, preserving goodwill and potentially preventing any further delays in payment. The manager’s friendly approach shows empathy, motivating the customer to prioritize paying their balance.
Moreover, personalized communication shows that the manager values the customer as an individual rather than just another account. This can lead to a sense of importance and respect for the customer, fostering loyalty and a willingness to cooperate in resolving the payment issue promptly.
Friendly and personalized communication can also uncover underlying reasons for the late payment, such as financial difficulties or internal processing challenges. By opening up a dialogue in a non-confrontational manner, the manager may be able to identify solutions or alternative payment arrangements that work for both parties, ultimately facilitating quicker resolution of the outstanding balance.
What makes an Accounts Receivable manager’s job difficult is confusion. Confusion in the invoice, in the files; disaggregated, unreliable data are their worst enemy. If you see Accounts Managers as a company’s superheroes, then figure yourself confusion as their kryptonite.
Therefore, a good Accounts Receivable manager knows that in order to thrive, they must leave no room for opacity and chaos.
Good accounts receivable managers establish a set of policies that clearly define credit terms for your customers. These might include provisions such as the level of credit that can be granted, payment terms, interest, what constitutes a default and how the policies will be enforced. Clear credit policies help mitigate credit risk by defining the criteria for extending credit to customers. It also ensures consistency in credit decisions across different customers and transactions. This consistency promotes fairness and transparency, reducing the risk of favoritism or discrimination in credit terms. More importantly, transparent credit policies contribute to positive customer relations by setting clear expectations regarding payment terms and credit terms. Customers appreciate clarity and predictability in their financial dealings with suppliers, leading to improved satisfaction and loyalty.
They create a comprehensive process for determining credit eligibility, designing guideline to offer flexibility and options for expanding the customer base while ensuring risk exposure is minimised.They know they should not extend credit to customers who aren’t creditworthy, and the amount of credit they extend should reflect a reasonable consideration of risk, product value and the customer’s ability to pay. They base their decision-making on the review of financial statements and credit scores, customer’s net worth and payment history.
In addition to credit approvals and data management, invoicing also contributes to outstanding accounts receivable management. Without accurate invoices, there is no efficient AR management. AR managers need organised records of the work, products and/or services the company will be billing for. They know the invoices should include all the conditions agreed upon with the customer to avoid disputes. They also send invoices as early as possible to avoid delays.
The quality of the data your Accounts Receivable manager collects on your customers and the way it is stored is a crucial element that can impact their performances. Master data is a commonly used term for the basic static information kept on your customers. It contains information on customer profiles, such as company name, address and bank account, but not transaction data. Master Data Management (MDM) is the process of maintaining this information in a centralised location that is standardised, accessible and secure. Customer data can become problematic in many ways. When different departments in your company enter data on the same customer using different platforms or formats or without standardisation, you’ll have duplicate records that are difficult to interpret and use. This can strain your receivables when the data is needed to process overdue payments.
Therefore, a good practice for Accounts Receivable management lies in a well-implemented master data management system. It is essential to avoid problems by enabling your company to establish an information master record – a single, well-defined repository of all your organisation’s data across all departments and platforms. With clear policies in place, clearly defined terms and an understanding of the type of data they are collecting, AR managers can keep their data clean. They can even establish protocols for frequently checking the quality of their data to eliminate erroneous or contradictory information.
In today’s dynamic business environment, the role of Accounts Receivable managers is more critical than ever. Investing in the recruitment and empowerment of skilled professionals in this field is not just a prudent business decision; it’s a strategic imperative for ensuring financial resilience and competitiveness in the marketplace. As businesses navigate the complexities of cash flow management, Accounts Receivable managers stand as steadfast guardians, wielding their expertise and technology-enabled tools to safeguard financial health and propel organizational growth.
The Accounts Receivable Manager job description encapsulates a wide scope of skills and qualities. It may sound surprising, but it is not all about right-hand skills. It is also about left-hand skills.
– A sound knowledge of commercial law since they manage business and commercial disputes and of work psychology.
– They need to be rigorous, observant, and naturally organised and tenacious, especially when reminding customers until payment has been received. They have a perfect command of debt collection software and enforcement procedures.
– Excellent listening and interpersonal skills since they constantly contact the company’s customers. They must also be highly diplomatic to obtain payment from indebted customers despite their financial situation. This means he’s very good at negotiating while remaining sympathetic to customers.
– They can also adapt to all kinds of situations and know how to manage stress.
Given its importance, investing in measures that maximise accounts receivable efficiency is highly beneficial for your business. Therefore, you should invest in automation, as it can significantly aid Accounts Receivable managers in streamlining their processes and improving efficiency. PYMNTS’ 2023 study identifies a correlation between AR automation and reduced days sales outstanding (DSO).
Automation software can generate invoices automatically based on predefined criteria, such as sales orders or service delivery. It can then distribute these invoices via email or electronic invoicing platforms, reducing manual effort and ensuring timely delivery. According to PYMNTS’ 2023 study, 63 percent of interviewed CFOs credited automation for fewer invoicing errors.
Automated reminders can be scheduled to alert customers about upcoming or overdue payments, reducing the need for manual follow-up and improving collections.
Automation tools can match incoming payments with outstanding invoices, reconciling accounts receivable records accurately and efficiently.
Automated credit assessment processes can help Accounts Receivable managers evaluate customers’ creditworthiness, set credit limits, and monitor credit terms to minimize the risk of late payments or bad debts.
Automation software can aggregate data from various sources, providing Accounts Receivable managers with insights into payment trends, customer behavior, and collection performance. This data-driven approach enables informed decision-making and proactive strategies to optimize cash flow and reduce DSO (Days Sales Outstanding).
Automation solutions can seamlessly integrate with enterprise resource planning (ERP) systems, facilitating the exchange of information between accounts receivable, sales, and finance departments, thereby enhancing overall operational efficiency and accuracy.
By leveraging automation technologies, Accounts Receivable managers can streamline routine tasks, reduce manual errors, improve communication with customers, and focus more on strategic initiatives such as optimizing cash flow, reducing outstanding balances, and enhancing customer relationships.
You can learn more on the benefits of automating your financial operations and practical applications of automation tools for accounts receivable managers in our partnered webinar with QuickBooks.
Accounts Receivable managers are the unsung heroes of cash flow management within businesses, playing a pivotal role in ensuring financial stability and growth. Effective accounts receivable management is far more than just chasing overdue payments; it’s a multifaceted process that encompasses credit granting, invoicing, customer relations, and data management.
The impact of sound accounts receivable management reverberates across various aspects of a business, from reducing bad debts and improving cash flow to fostering positive customer relationships and bolstering investor confidence. The intricate balancing act required of Accounts Receivable managers, navigating between assertive debt collection and nurturing customer relations, underscores their importance as strategic assets within organizations.
Moreover, the advent of automation technology presents an unprecedented opportunity for Accounts Receivable managers to elevate their efficiency and effectiveness. By harnessing the power of automation tools for invoice generation, payment reminders, credit management, data analysis, and integration with ERP systems, Accounts Receivable managers can streamline operations, minimize errors, and focus on value-added activities that drive business success.
