We see organizations make common mistakes when managing their receivables, costing their organization not only money, but brand equity as well. 82% of businesses ultimately fail, which can be prevented by avoiding these simple mistakes and effectively managing your receivables process, resulting in better cash flow.
To save your organization time and money, it’s critical to identify these issues to stop them once and for all. Here are three of the most common mistakes organizations make when managing their receivables:
Mistake #1: Implementing Barrier-Laden Technology
When the technology you use creates barriers between your customers and your team, customer service suffers and so does your ability to effectively collect payments. Customers who need to resolve an invoice issue or other matter are turned off when you use automated dialers or robotic phone trees. Your organization needs to strike the right balance between human interaction and technology - Customers looking to solve a problem should be able to easily reach a live person to discuss the matter at hand, whereas those trying to pay their bill should have access to a straightforward way of doing so. This means no unnecessary technology or procedures, such as automated reps or long hold times. Instead, use systems that enhance your process and are simple to use. Technology has its place but it needs to be balanced with humanity.
Mistake #2: Having the Wrong People on the Phone
Not having the right people on the phone can make managing receivables more challenging. The employees you select to interact with your customers who owe your organization money must have exceptional customer service skills, while also acting as a process-driven receivables specialist. It’s common for many organizations to hire a person who has either one skill or the other, rather than possessing both. Demeanor is also an important element to consider - A person who is too shy won’t be assertive enough to resolve the issue and collect the payment while someone too aggressive can give your company a bad reputation. Instead, choose receivables specialists with desirable customer service skills and qualities.
Mistake #3: Having a Complicated Receivables Process
Without a streamlined and easy-to-understand receivables process, your organization can make collecting payments challenging. When your customers don’t understand the steps to take to resolve an outstanding invoice, they can get lost in the process. To avoid this problem, ensure you have a standardized receivables process in place. Train your representatives on this process, as well as when and how to follow up with customers. Communicate clearly to your customers, to ensure everyone is on the same page. If your employees do not follow standards neither will your customers - so keep it simple.
It’s also important to know when you should let go of receivables because they will lose value the longer you hold onto them. For instance, your organization may only be able to collect 52% of the value of a six-month past-due invoice, according to research from the Commercial Collection Agency Association. It’s best to have a simple receivables process in place, so your accounts don’t sit idle too long and lose value.
From having the wrong people on the phone to having a complicated receivables process, the most common mistakes organizations make are often costly, time-consuming ones. If you can fix or enhance these three common issues in your organization, you’ll be well on your way to enhanced cash flow while optimizing your customer relationships. The best news is that you don’t have to manage your receivables on your own - Contact Tavelli Co., Inc. to partner with us and supplement your receivables efforts today.
Tavelli Co., Inc. has over 37 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.
IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.