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Top 5 ways to help your Accounts Receivables Teams

Let's think for a moment; we are in a perfect world.

In that world, Deals are signed, services work, and they go live straight away with immediate benefits to the customer.

We even have the correct contract details matching what was sold to them.

This then flows to a perfectly synced billing platform where it bills perfectly.

The invoice is posted to a portal with an engaging notification and matches exactly what's expected.

It has clear remittance advice, and payments are made not on time but early!

We have reports of payments and can predict payments precisely with no arrears!

Misunderstandings and incorrect information happen. For all sorts of reasons, we have product name differences on contracts to services provided, issues in implementation, bills that are not matching precisely, Purchase Order Numbers that don't appear on the invoices correctly and rates or quantities that don't match.

We see the wrong contact, address, legal entity, and payment; it's a Wednesday, and it should be a Thursday… basically, anything can go wrong.

What does this lead to?

Customer dissatisfaction, Non-Payment and decreased revenues.

Luckily, many excellent companies are built to solve precisely these problems.

1 - Customer Contracts Not Matching Billing

One of the worst things that happen is for a customer to join and be hit by incorrect Invoices. There are many ways to help this - good order management in Sales Operations and reconciliation between systems to ensure matching records during the API push to the financial stack. But simply put - having a reliable Contract Lifecycle Management tool prevents these at the source. There are many great examples like Conga, Docusign and IronClad.

The deal desk should be the frontline for data governance in Finance, so enabling them with the best-in-class tool to support their work is vital down the line. Conga did a study showing that the savings could be worth more than $1M. It’s worth evaluating what you have to be sure it's the right solution for you and your go-to-market teams.

2 - Too many customers moving the buckets untouched

Resources can be tight in collections at times, so most collections managers know that they have to make the processes as efficient and effective as possible. This is where a dunning process comes in. Dunning is the process of methodically speaking with customers to ensure the collection of outstanding invoices or debts.

This process can be automated quickly, and many companies like High Radius include this within their platform. Other great examples are the processes in NetSuite, and in fact, most cloud-based ERPs will have a form of Dunning Automation as a module. Ultimately it is essential for scale and with. The ability to send mass emails based on set rules and with wording that hits home and is consistent across the company.

This, combined with some of the best links to seamlessly accept payment, is the way to get that SMB or B2C collections without the need to track each customer manually.

You can even then automate and log the responses or disputes in these tools, so all the notes are in a single location - or you can push any responses into a CRM like Salesforce, HubSpot or Freshdesk for more comprehensive visibility into any potential issues and for your Collections or Billing Teams to investigate matters fast.

3 - Where or who to pass an invoice to?

With the increase in the automation of the accounts payable function, Tipalti has seen a doubling in teams fully automated. This will mean that more banks, fintech and SaaS solutions will be providing portals for invoice uploads for what will be a race to gain the most ground. The result is that someone has to manage that integration or manually complete that work. That's where come in. They quickly take that worry away and act as the middleware between your Billing platform or ERP and your customers.

4 - Payment status and Tracking

Payment tracking or the worry about understanding the customer's payment status, especially at the crunch times of the month. This is where Tipalti and Coupa are leaders. They help provide a space for invoices to be uploaded and then have rules in place so payments can go out automatically and send webhooks to other systems like High Radius, Netsuite or your ERP. They then receive this information, update the status automatically, and easily add to your cash forecast and reporting. Knowing when cash is coming in based on these status updates can help remove the stress in the management of the collections teams and focus time on the customers that matter most in their portfolio.

5 - Risk Management

Identifying the customers at risk of non-payment is critical—having that crystal ball into what is a risk to your revenue. You can think of this in multiple ways; for higher growth SaaS businesses, they will generally accept a much higher level of risk to grow fast; however, usually, this means that sales are higher and faster, but the DSO is high, and the bad debt can be higher.

You can mitigate this risk by either adding steps into the sales cycle:

  • Credit Checking

  • Enforcing recurring payment methods like credit card or Direct Debit Payments to specific customer values

  • Requiring payment on order for services

  • Introducing Annual Upfront Payments with discount

These things can sometimes feel like adding friction to the sales journey, but many High-Growth SaaS businesses operate this successfully. We can also improve the overall revenue recognition by having a more reliable, and in the case of annual upfront, you can recognise revenue sooner.

This should help reduce the riskier customers coming in, but you have to consider the existing customers that could have a downturn in fortunes.

Ultimately, all of this is down to priority and your needs. I believe that overall, the choices you make here in collections need to be in step with the sales organisation and the business growth needs. Many root causes are upfront, and any risk should be made knowingly. This is where a good Revenue Operations team can come in by working with the sales teams whilst understanding the downstream impacts of not managing risk effectively. The balance between ARR Growth and a good standard of DSO is tricky to manage, but each side of the table should be aware of the consequences of any changes or decisions, given the impact on the business.

In my experience, collections rarely cause the issue but are the ones left cleaning it up. Keep track of the root cause of disputes and then meet with Revenue Operations regularly to help solve them where possible or give the resources needed to cover the upfront risks.

Make your tech stack work for you, have a view of what is being sold, and make the contract terms match the available terms in your billing platform. Review the exceptions in the platform and track where they are coming from. Once you have that, have a platform that can help put the invoices into customers' hands, either a simple email client and then manual people to deal with any portals or use MontoPay to pass automatically into the portals of your customer's ERP. Automate your dunnings procedure and have easy payment links to reconcile your payments to invoices automatically.

With even just a few of these, you will have a better team and improved customer experience whilst reducing your DSO and improving your all-important cash flow.

If you are interested in knowing more about me or would like me to work with you on your next project, please book some time to discuss what I can help with and make sure to subscribe to my following updates.

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