How to talk to your clients about A/R
Every day, your clients work hard to make sales. Sadly, a large portion of those sales go uncollected.
It’s bittersweet looking at the balance sheet and seeing a growing accounts receivable ledger. It’s a sight that leaves most business owners thinking about what could be if only they had all of those pesky uncollected payments in their bank account.
The massive pain of uncollected payments has business owners everywhere looking for a solution and many are turning to one of their most trusted resources: their accountants. In fact, a survey found that 37% of businesses want their accountant’s guidance on accounts receivable and accounts payable.
It’s time to start offering accounts receivables management as a service. If you’re unsure on what that should look like, we’ve got you covered.
What clients want from an accounts receivable service
Business owners juggle many different responsibilities. Staying on top of their accounts receivable and following up with delinquent clients is low on the priority list. For some, looking at their accounts receivable balance makes them feel helpless as reminder emails and unanswered phone calls feel like yelling into a void. Too many still don’t even look at it at all.
In a recent survey, it was found that 32% of business owners faced cash flow problems in the last 12 months. 21% of the businesses surveyed also reported a need for capital. The answer to both could lie in that ballooning accounts receivable balance on their balance sheet.
Beyond helping with communication and collection, business owners want insight on how payments affect cash flow and strategies on how to put that cash to use.
Always tie accounts receivable back to the bigger picture. For example, provide updates on how payments affect the business’s runway, progression to financial goals like a new purchase, or new strategies on putting payments to work effectively. Your advice is the way you can deliver the most value to your clients in the era of automation.
The top accounts receivable talking points to cover
Whether it’s an appointment, a phone call, or an email, make sure to build your touchpoints about accounts receivable around the following topics.
It’s estimated that nearly 50% of all invoices issued by US businesses become overdue. Facing unpaid invoices is an inevitability, but you can still push your clients to engage with only the highest value clients. Provide updates on average turnaround time by client and warning signs like clients whose turn around time is increasing.
Talking about delinquent clients is especially important in the early days of your services. As your engagement continues, the service should evolve to include suggestions for decreasing turnaround times. Offer advice on payment terms including fees and interest or implementing robust reminders and friendly human follow up calls using a system like CollBox.
Getting the most from unpaid invoices
When it’s time to cut losses, there are best practices. Many business owners simply move on from the uncollected amount without knowing that they can put their bad debt to work.
Guide your clients through the options for how they can make the most of even the oldest unpaid invoices. Offer solutions like writing off their bad debt as a tax deduction or working with a collections agency. With CollBox's "Collect" service add-on, your clients get connected with a vetted collections expert who will own getting paid, with a 12% higher success rate than industry average.
Next steps after collection
Unexpected windfalls of cash are a massive help to businesses, but it can also cause poor spending practices since human psychology thinks of it as “bonus money.” Take a lesson from lottery winners of which 70% go broke in three to five years after winning.
Early on in your engagement, ask about long-term financial goals. Suggest setting up a savings account for each long-term goal and depositing all payments from overdue invoices into them. This can include establishing a rainy day fund, a purchase of new equipment, hiring a marketing agency, or even personal uses.
The point to drive home is that if these payments aren’t essential to their operations and they’ve already mentally moved on, it can more easily be put to work. Take time to help them establish these goals and select savings accounts for the collected payments.
Putting collected payments into savings accounts not only helps them rationalize the funds as untouchable, but also generates returns if the money is sitting for long periods of time.
Long-term insights and learnings
The longer your engagement lasts, the more valuable insights you’ll have to deliver on. Find ways to group customers together by industry, goods or services purchased, or location. From here, you can identify which groups have the highest tendency of delinquency.
The purpose of your insights is to help businesses find the ideal customer profile where payments are consistent and on time. Helping your clients find their niche is an invaluable way of increasing the likelihood of being paid, but can also improve the efficiency of their marketing and sales process.
Streamline accounts receivable for more time to deliver value
Your clients want to offload their accounts receivables process because it’s a hassle. But that doesn’t mean it has to be a hassle for you.
With CollBox all past-due invoice follow up is handled automatically by our team of friendly A/R experts. Your staff won’t need to spend time chasing down payments, the platform does that for your clients. With CollBox Assist, follow-ups with clients’ customers are completely automated including the use of our team of A/R Specialists and your client keeps 100% of invoices paid. All of these accounts receivable management features are packaged in a platform that integrates with popular accounting software like QuickBooks Online, Xero, Sage, and FreshBooks.