You might have heard Funding Gates being called a “CRM for Receivables Management“, but just what does that mean? You know what CRM means (customer relationship management), and you know what receivables management is, but how do the two relate?
The fact is, receivables management is very much a part of the sales process. As you well know, just because you made the sale doesn’t guarantee you are going to be paid. That’s why it’s important to apply the discipline and details you would to CRM all the way through to your ARM (accounts receivables management). Here are the top 3 reasons you should approach getting paid with a focus on the customer relationship:
CRM for Receivables Management: What Does That Even Mean?
1. Maintaining the Relationship – To begin, it’s 6 to 7 times more expensive to acquire a new customer than to retain an old one. That’s why, at the heart of everything, you must approach receivables management with the goal of maintaining the customer relationship. You cannot afford to lose every customer who pays you late. Late payment situations are widely varied: there are customers who fail to pay ever, there are those who tend to forget and then those who fall on a hard, yet unusual, time financially. These are just a few examples. If a customer is a chronic debtor than, yes, that relationship is most likely not worth maintaining. But for many customers, late payment is merely a one-time offense, or perhaps even the product of your own inability to effectively remind them about payment. That’s why, no matter the case, you should approach payment conversations as you would any other: with an intent of keeping the relationship, as much as your intent is also to get paid. Remember customer service every time you pick up the phone to call, unless you’ve declared that customer a deadbeat.
2. Keeping Everyone in the Know – A huge part of CRM is the physical customer management. The best way to service your customer in sales is to stay on the same page as a team. As you know, when working to make a sale, you are constantly taking notes on the customer. You learn about them and try to remember important facts about their life. You also keep their information up-to-date and well organized so you can always reach out if need be. Even more importantly, you keep notes of all your communication so others on your team know exactly what’s going on with a sale.
With our app‘s new multi user function, every user’s actions are clearly attributed and logged so you can see who’s already taken actions on specific accounts, and move on to tackle the remaining past due parties. When tracking communication that relates to collecting on a past due invoice, be sure to comment on your expectation of payment as a result of any interaction. This will help jog your memory and inform other team members of the progress of the payment.
Receivables management IS an active, continual part of the sales cycle, meaning you need to maintain detailed communication records until that check has been received. We’ve found that when you’re able to accurately comment on your collections efforts, the past due client is less likely to respond with excuses.
3. Always Up-to-Date Details. As the business relationship grows with time, always keep the customer’s information up-to-date so you have a way in which to contact them if you have questions about their payment. You never know when a normally on-time and organized company may experience a period of financial difficult and fall behind on payments. Be careful to note the email address of the person who responds to your inquires, or who’s name appears on billing. Sometimes it’s much faster to go to the specific person who handles Accounts Payable instead of dealing with the owner of Chief Financial Officer.
4. Increases Collectability – At the end of the day, if you are treating your customers with kindness and respect, they are more willing to keep doing business with you. That’s just one advantage of remembering customer service in your receivables management. The truth is, however, one of the biggest reasons businesses don’t get paid is because things fall through the cracks. It’s all too easy to forget about an invoice and 9 months later realize it wasn’t paid. When you are dealing with 10’s, 20’s, 100’s or even 1,000’s of invoices a month, of course it would be difficult to maintain communication details and the expected timeline of each payment. It, without a doubt, makes perfect sense that an invoice or two a month would fall by the wayside. However, that invoice that gets forgotten could be worth thousands of dollars, which can have a huge impact on your cash flow. But if you take the time to stay as organized with your receivables management as you do your sales process, you will find an increase in your collectability rates. Not to mention, you’ll save time and stress down the road.
Receivables management is a crucial part of your business and proper receivables management is literally the difference between you getting paid and not getting paid. However, add a little CRM to your receivables management and start getting paid faster today.