Collecting Unpaid Invoices: Prioritize A/R Collections Calls (Part 1)

In a majority of companies, both large and small, collecting unpaid invoices is a constant battle. There are a number of strategies and best practices out there to help you better manage you’re accounts receivable; I am about to give you another. Work with a strategy that identifies your priority accounts, plan personal communications with those high priority accounts, and use tools to help you automate communications with your lower priority accounts.

So step one in this process will be to pick your high priority customers keeping in mind that about 20% of your active customer base accounts for 80% of the activity and you should focus your limited collection resources on these customers where personal contact will have the maximum impact.  Also, keep in mind how many resources you have available to make these personal contacts and how much time they have to manage those relationships.
So how do you figure out who is a high priority?

You will need to take a look at your customers from a few different angles to determine where they should fall on the priority list; use ageing reports and customer history and past interactions to help you analyze the following:

1. Account balances. Focus on the large amounts.
2. Payment history. Slow and erratic payers vs. those who pay consistently without the need for reminders?
3. Purchase history.  Customers that purchase frequently are more dependent on your business, products, and services. You have more leverage with them.
4. History of interactions. How easy/ difficult are they to work with? If you have limited resources they should focus on the tough collection situations.
5. General collection risk.   Assess the customer’s ability to pay.
6. Specific collection risk.  Likewise, company information (e.g. length of time in business) is also a predictor of collection rise.
7. Profit margin on sales.  With low margin accounts the sooner you can collect the better due to carrying costs

A collections automation tool like Anytime Collect would be helpful by bringing all this information together in one place. It is important to keep monitoring this information at least quarterly as your customer base changes.  So if you have a lot of information and plan on analyzing it often, a system such as the aforementioned would be extremely helpful.

With this list you will be well on your way to collecting unpaid invoices faster and handling the entire process more efficiently. But there is more to learn! Now that you have this list you will need to know what to do with it- tune in next week!  

About e2b teknologies:

e2b teknologies operates three business units – e2b anytime apps , e2b enterprise, and e2b calibration. e2b enterprise develops custom cloud-based business applications and resells leading ERP accounting software, CRM, HRMS, and other enterprise business software applications from Sage Software, Epicor, Intacct, SugarCRM, and other publishers. e2b anytime is the publisher of; Anytime Commerce B2B ecommerce platform, Anytime Collect, Anytime Assets, Anytime 500, and related Anytime brand products.  e2b calibration is an ISO/IEC 17025 accredited calibration and repair laboratory providing a full scope of services (traceable to NIST) for most popular calibration, test, and measurement instruments.

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by Jeanne Lee

photo credit: freedigitalphotos.net