We are all familiar with the definition of insanity: Doing the same thing over and over again, all while expecting a different result. Many companies find themselves in this category when they make the same mistakes over and over again without correcting the process. These mistakes cost their organization not only money, but brand equity as well. The shocking reality is that 82% of businesses ultimately fail and typically for common reasons. However, this risk can be significantly diminished by avoiding these simple mistakes and effectively managing the receivables process, resulting in better cash flow.
To save your organization time and money, it is critical to identify these issues in order 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 as well as your ability to effectively collect payments. Customers who need to resolve an invoice issue, or other matters, become discouraged and are turned away 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 means of doing so. The last thing you want to do is make payment complicated for the customer. This means no unnecessary technology or procedures, such as automated representatives or long hold times. Instead, use systems that enhance your process and are simple to use. While the apparent efficiency of technology can be appealing initially, it becomes counter intuitive if it prevents people from paying their bills, especially during these difficult times. Technology has its place, but it needs to be balanced with humanity in order to remain effective.
Mistake #2: Having the Wrong People on the Phone
Just as technology can have a negative impact on your receivables, not having the right people on the phone can make managing receivables more challenging. The employees you select to interact with your customers, that owe your organization money, must have exceptional customer service skills, while also acting as a consistent process-driven receivables specialist. It is common for many organizations to hire a person who has either one skill or the other, rather than possessing both. A confident and competent demeanor are also important elements to consider; a person who is too shy may not be assertive enough to resolve the issue and collect the payment while someone too aggressive may give your company a bad reputation. Instead, choose receivables specialists with desirable customer service skills and qualities that also understands the whole business relationship picture.
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 do not 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 clear standards, neither will your customers - so keep it simple.
It is 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 percent of the value of a six-month past-due invoice, according to research from the Commercial Collection Agency Association. It is best to have a simple receivables process in place, so your accounts do not 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 will be well on your way to enhanced cash flow while optimizing your customer relationships. The best news is that you do not have to manage your receivables on your own - contact Tavelli Co., Inc. to partner with us and supplement your receivables efforts today. We are available for training, as well as extended collection services provided at the right time for maximum recovery and client retention.
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.