If you are a salesperson or an A/R manager, you should probably read this.
Collecting payments is a struggle for any finance department, with many hurdles cropping up throughout the process. Often, the very first problem starts in the sales department.
Salespeople are super-focused on revenue and new customers. And they should! After all, the sales team's goal is to convert leads, get the commission, and move on to the next lead. With that said, there are a few small actions they could take and save their company thousands of extra dollars in the future.
Every time the sales team fails to acquire essential information about the customer at the beginning of the contract, it creates more manual work for the A/R team later on. More and more problems pop up down the line and, ultimately, your company experiences a massive increase in delayed payments.
That’s why B2B companies need to foster a tight-knit relationship between their sales and finance teams. By working together and making some simple tweaks to internal processes, you can benefit from faster, more seamless transactions.
We’ve spoken to our A/R experts to get their top tips. Here’s what they recommend:
Tip #1 - Map out your customer’s finance unit
Whenever a sale is closed, ensure the sales team asks the new customer the following questions:
Who is the billing contact?
Who approves the payments? Is there someone who has to sign the invoice before it goes to accounts payable?
Do you use a vendor portal? Should we submit your invoices online to an A/P portal?
If the A/R team receives disputes, who should we approach in your organization?
If the sales team does not get the necessary information to contact the customer later on, a payment can end up 40-45 days past due. Ensure the sales team gets answers to these important questions as soon as possible. That includes knowing whether to send the invoice to a supplier portal, a specific person, or to accounting@companyname.com.
At the end of the day, if the sales team does not give this detail the proper attention, ARR will not be able to turn into cash!
Tip #2 - POs should be forwarded directly to the A/R team
Usually, A/R teams find themselves in back-and-forth correspondence with their customers’ AP department looking for a PO number. In cases where the customer maintains a purchase order for every payment, you often can’t submit an invoice without that PO number, either manually or online. Invoices that are not raised “by-the-book” and submitted in the exact manner the customer requests, will likely be rejected. This will undoubtedly have a direct impact on delayed payments.
From talking to customers, we have found out that the PO is typically already sitting in the inbox of your AE or CSM team! Cut out the unnecessary chasing by ensuring POs are forwarded directly to the A/R team.
Tip #3 - Define the bank account policy
The bank account you get paid to needs to be the same account that appears on the invoice. The sales team must ensure that they provide the customer with the correct bank account details and entity to which you want to receive payment. Enlist the help of the AE, as they can help you make sure your customers know where to send the payment. Facilitate your customers whenever you can.
Tip #4 - Make friends in the right places
As the outward faces of your company, it’s the role of the AE and CSM teams to build relationships with customers, which in turn can improve the collection processes. As an A/R manager, you need to make sure you are a good friend to these people within your organization, to ensure any hurdles you might run into are dealt with smoothly and amicably. In return, you can provide your AE friends with some amazing insights into the customers by virtue of your relationship with their AP or procurement teams. Make connections wisely!
The simple question to faster collections
By building the right internal relationships, making simple changes to the internal process, and mapping out the financial flow of an invoice for each buyer, you can save thousands of dollars and reduce the time your team spends chasing payments. Even adding the simple question of “Who is the billing contact?” to your customers’ agreement can make life for an A/R team a little bit easier.
Stay tuned if you're looking for more insights about collections and modern A/R challenges. We continue our research in Monto every week, and we keep our blogs updated.