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How Does Accounts Receivable Management Strengthens Client Relationships?

by Anushree Sharma - 24 Jun 2022, Friday 491 Views Like (0)
How Does Accounts Receivable Management Strengthens Client Relationships?

Introduction

The vast majority of your clients have no trouble paying you what you owe and on time. Poor accounts receivable management, on the other hand, can irritate even your most loyal clients. Customers are often satisfied with receiving a bill at a specific time and expecting it to be paid within a specific time range. However, a haphazard AR process can have an impact on your clients' financial management.

Customers are also less inclined to speak up and demand payment when AR is not regulated and monitored. As a result, accounts may go unpaid for an extended period of time, you may have problems collecting what you're owed, and you may have difficulty managing your cash flow and working capital.\

Good Customer Service and Accounts Receivable Management Join Hands

Trust, predictability, and consistency are the foundations of good client relationships. It's easier for everyone to be on the same page when accounts are carefully structured and tracked. Clients are aware that you will bill them on a specific date, and they can plan ahead to have funds ready to pay you.

Each client understands they're getting the same treatment as everyone else when you apply your AR practices consistently. Consider accounts receivable management to be an important, behind-the-scenes component of your total customer service strategy.

Best Practices in Accounts Receivable Management

Keep your accounts receivable management on track with these best practices.

  • Review accounts on a regular basis to ensure that client information is accurate and up to date.
  • Create a clear, consistent, and fair credit approval policy and follow it consistently.
  • Make your billing process more orderly and uniform by automating what you can.
  • Assign roles and responsibilities to your billing and accounts receivable teams.
  • Double-check that all payments have been applied and credited accurately.
  • Create a clear collection procedure for past-due payments and follow it religiously.
  • Keep an eye on data like Days Sales Outstanding in AR (DSO).
  • Provide your clients with payment options they choose, such as online payments and recurring payments for clients that pay a monthly flat charge.


Accounts Receivable Management Can Be Outsourced

"That's fantastic," you could say, "but we're a little business with no means to hire an AR chief or a billing staff." Don't be concerned. Outstanding accounts receivable management doesn't require a complete department; it can be handled by a small team or even a single person with the correct tools and the drive to succeed.

You may also outsource accounts receivable management to organizations that will handle everything for you. This can be less expensive than hiring an AR chief, and you can rest assured that your AR needs will be met by experts.

Strong client connections and accounts receivable management go hand in hand. It's a rare client who simply refuses to pay. The majority of your customers are eager to pay their bills on time, and if your AR procedures are sound and consistent, you make things easier for them. If you give them a variety of payment options to pick from, you'll boost the convenience factor (and their loyalty).

Clients are more likely to stick with you when they know what to expect and how well you manage their accounts. They're also significantly less likely to get into a billing dispute with you, which could harm your connection.

Why is Accounts Receivable Management Important?

AR management has a significant impact on cash flow and a variety of other aspects of the firm. As a result, it should be given the attention it deserves at all times.

You run the risk of not having enough cash on hand to pay for critical activities like salaries, purchases, and dividends if your firm is not efficiently managing its collections and there is a widespread and recurring problem of payments in arrears.

Good AR management helps you keep good relationships with your consumers and improves your company's reputation. Poor customer service might hurt your company's capacity to retain customers and get favorable deals in the future.

Finally, the quality of your accounts receivable programme may have an impact on your investor relations and ability to expand. Your balance sheet and bottom line are both affected by cash flow. As an indicator of solid balance sheets, investors and lenders will examine to see if your company has an effective accounts receivable process and a decent track record for collecting payments.

Conclusion: 

Hand over the reins of your accounting needs to the specialists. MNS Credit Management Group is well-known around the world for its specialized accounting outsourcing services. Several accounting firms have benefited from our advice. Get in touch with us right away!