The 6 Most Ineffective Ways to Manage Your Receivables
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The 6 Most Ineffective Ways to Manage Your Receivables


Everybody wants to get paid and everybody wants to get paid on time. Getting paid is a business of itself, and it takes diligent management of your receivables to make it happen. However, not everyone realizes how much attention receivables really do require. They want the money, but not necessarily the work it takes to set-up a seamless system to make getting paid possible. If you’re doing one of the following below, you are not managing your receivables in the most effective way. But, change these habits today, and you’ll find getting paid is a lot less painful than one could have ever imagined.

The 6 Most Ineffective Ways to Manage Your Receivables

1) Not Having Your Priorities Straight – If your receivables are not at the top of your priority list, you are already in big trouble. Yes, it’s true, you’re a business owner or an insanely busy employee and you just don’t have time to make everything a priority. But the money your business is owed should always be at the top of that list, whether it means hiring someone to take on the responsibility part-time, or making it a habit to set aside a few hours a week (say every Thursday from 1:00 PM to 3:00 PM) to devote to these invoices. By making receivables sit atop of your priorities, you will instantly increase your chances of getting paid.

2) Disorganized Communication – Are you printing out your aging reports and making notes of your communication on those papers? What happens when those papers are thrown away? What happens if another employee tries to contact the customer and has no record of your call to reference? You need to be using a CRM system for your receivables management, one that allows everyone (even if it is just yourself) to know what’s going on with a customer and what actions have been taken. Not sure where to start? Try out this CRM for receivables management for free.

3) Only Accepting Checks – In this day and age, if the only way you are accepting payment for your receivables is by a check through the mail, you are automatically decreasing your chances of getting paid. You are making it more difficult for the customer to pay and easier for them to forget. By accepting online credit card or ACH payments, you are allowing the customer to take instant action on a payment, as well as giving you an easy option to set-up an installment plan (a great way to get a cash-tight customer to start paying).

4) Following Up…Eventually – In receivables, the longer you wait, the harder it is to get paid. In fact, for invoices 90 + days past due, it’s nearly impossible to collect. The day an invoice becomes past due, you should start taking action. The best time frame is within the first 30 days of the invoice becoming past due. Whatever you do, stop delaying. Unpaid invoices require immediate attention.

5) Never Picking Up the Phone – It’s great if you are sending your customer reminder after reminder about their unpaid invoice, but if you are not seeing a response, you have to change your tactics. As busy as you are, you can relate to just how busy your customers can be. Sometimes, when they receive mail, it gets pushed to the side and easily forgotten. However, a phone call can help put things in motion. When you call your customers in regards to a late payment, they will see just how serious you are about getting paid. You’ll help put the payment back at the top of their priority list. Many business owners avoid these calls because they can be tense. But, if you prepare properly beforehand, even referencing a collection call script, then you’ll be able to gracefully handle the receivables call.

6) Letting Things Slide – If you never “punish” a customer for paying late, then why should they avoid doing so? To help motivate on-time payments, develop consequences for late payments. Late fees are an excellent example, as no customer wants to have to owe more than they already do. Just be sure to check your state’s usury laws so you are not charging too much. Also, alert the customer when you first invoice them, so they are well aware of the consequences of not paying that particular invoice. Running a strict credit-process is key in managing your receivables.

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4 Responses to The 6 Most Ineffective Ways to Manage Your Receivables

  1. Kingshuk Chattaraj says:

    Nice post Meredith.At the same time I would like to take this opportunity to emphasize that Accounts Receivables should be and must be looked at as a collective responsibility of the entire organization and not just the person who is is charge of it. Most of the time we find that receivables which ultimately become past due do so because we fail to comply with our commitments. While following up is an essential part and parcel of the collection process it must be kept in mind that in case we find an account becoming severely delinquent it becomes the responsibility of of each and every stakeholder in the organization to pitch in and do his/her bit to ensure that the matter is resolved. This pro activeness is found lacking most of the times due to the fact that when interventions from a senior level is required they are always found to be hard pressed for time which delays the process further and makes a likely resolution more difficult to achieve. Similarly other departments whose co-operation is required essentially for a resolution do not take it upon themselves as a responsibility to make sure that a solution is reached. At the end of a particular period the collections representative is blamed for the entire piling up when it is clearly not his fault.

  2. Meredith Wood says:


    Thanks for stopping by :). I really love this addition. Collections is something that not a lot of people want to deal with, so it is definitely easier to push it off onto the individual *technically* responsible for it and forget all about it. But some time it’s those other team members that can succeed at the final push: the salesperson who has a better relationship with the customer, the boss who’s phone call can let the customer know just how serious the payment is. A missed payment effects the whole company and the whole company holds a responsibility. I love it! That’s why at Funding Gates we preach the philosophy of “CRM” for receivables. It’s about communicating from top-to-bottom, about everyone having access and a stake in what’s going on with a customer. It’s not simply invoicing and collecting. It’s a lot more complex. It’s the relationship! Again, glad you dropped by! Hope to see you around these parts again soon!


  3. Thanks for this post. Do you know another tools (software) to manage AR?

  4. Meredith Wood says:

    I don’t know anyone else that does what we do exactly, Velin. You can find more on our features here: However, there are few people who handle parts like billing, accepting payments. What size of business are you looking for and what would you like for the software to do?

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