Upping Your Game: Accounts Receivables Team Performance

Nicole Dwyer

The accounts receivables team is one of the most critical teams in your company. If your AR team doesn’t collect the proceeds from invoices, the efforts of sales, marketing, customer service, and human resources are wasted.

The benefits of improving AR team performance include:

  • Improved cash flow
  • Better relationships with internal teams
  • Enhanced customer relationships
  • Reduced costs of collection

Simply put, the success of the AR team can make or break your company, so all eyes are aimed at your department. That means you must be constantly refining your methods and improving results. Here are some suggestions to up your game for better AR team performance and optimized cash flow.

Take a Proactive Approach to AR Team Performance Improvement

Too often the driving force behind progress is problem resolution. Does your AR team evolve on a reactive or proactive basis? When a problem crops up, you correct that issue and (hopefully) prevent it from happening in the future. But wouldn't it be better to get ahead of the issues?

The perceived value of your AR department climbs when you’re known for solving potential problems before they manifest. Scrambling to repair a crisis is necessary sometimes, but problem prevention is the platinum standard. Adopt a forensic mindset. Look back and study past issues to predict and prevent future AR hazards.

One example of a proactive strategy is to dissect invoices that run greater than 60 days late. What do they have in common?

  • Are the late-paid invoices from the same sales person? This could be a training issue that you can identify and get out in front of to improve outcomes and prevent future delinquencies.
  • Are overdue invoices linked to the same item or service? Your team might identify dissatisfiers in delivery of certain services or product flaws if you discover common factors. This can improve sales offerings and customer satisfaction..
  • Is it just one or two clients that always run late? If they were not identified as high-risk clients, perhaps your credit-worthiness criteria needs fine-tuned. You might find client AP cycles are misaligned with your AR cycles and a subtle shift in processes could wipe out late pays.
  • Are late invoices all from clients in a particular niche? You may need to develop risk, invoicing, and collection guidelines that are niche-specific. This can be a red flag that AR/sales/customer service needs to research to better understand this niche.

By studying trends and metrics, you can gain insight and get out in front of problems.

Equip and Empower Your Team

Tech is a top tool to enhance AR team performance. Start by considering what processes are automated or outsourced versus those that are highly manual. Can manual processes and reports be discarded or replaced? Are these tasks done out of habit or because they add value?

Some AR processes that are ripe for automation include:

  • Customer onboarding
  • Invoicing
  • Remittance processing
  • Risk reporting
  • Cash application
  • Credit management
  • AR collection

Figure out the biggest time-drains for your team so you can remedy the productivity hemorrhages. Faster hardware, automation, and outsourcing are potential solutions to explore. Run a cost-benefit analysis, and implement where you’ll get the most bang for your buck.

Document Best Practices

Start with the systems, policies, and procedures currently in place. Document them in a central repository—perhaps a team wiki. As you chronicle, you’ll gain clarity and notice gaps and flaws in your methods and processes. Once you have the baseline recorded, it's time to curate input, observations, and suggestions from your team.

While documenting policies and developing best practices, be sure to:

  • Map your processes and compare to documentation
  • Identify opportunities for improvement and cost/time savings
  • Develop/improve escalation plans for AR delinquencies  
  • Consider implementing exception policies and management-by-exception  

Capitalize on Communication

When running an AR team, you must track:

  • AR team communication
  • Interdepartmental communication
  • External communication with clients

In some companies, AR and collection communication is an ad-hoc hodgepodge of sticky notes and random emails. Centralizing communication is key. AR team members should be able to review client communication logs.

With an archive in place, it’s easier to assess when to involve other stakeholders and when to escalate issues. Be sure their interactions related to AR are part of the communication register.

Deepen Client Relationships

Building solid client relationships is key to a smooth-running AR department. Clients shouldn’t hear from you only when there are problems. In fact, the stronger the relationship, the less likely you’ll have issues. When a client pays late because of an oversight, that’s not a crisis.

However, a delayed payment that's intentional could be a sign of dissatisfaction. With a good relationship in place, you can discover and address the underlying issue. If the client is unhappy, you might be the first to realize trouble is afoot. When AR collection turns into customer retention success, it’s a value-add.

Encourage AR Visibility and Transparency

A critical focus area when refining AR team performance is visibility. Most non-finance people don’t understand what goes on behind the veil in accounting. Help stakeholders understand the AR collections process and the effort of your team to realize cash flow from sales.

To paraphrase Stan Lee, with great transparency comes great responsibility. When you raise the visibility of your team, be prepared for heightened scrutiny. When your AR team steps into the light, you'll be expected to deliver meaningful results and improve on them constantly.

Want to explore automation AR solutions to improve the efficiency of your accounts receivable team performance? Contact us today.




Nicole Dwyer
About the Author

Nicole Dwyer is Chief Product Officer for YayPay, bringing more than 10 years’ experience in accounts payable and receivable technology to ensure YayPay continues to meet the needs of its customers. Having spent her entire career in commercial payments, Nicole understands high- and low-value payment systems, the complexities of how businesses pay and get paid, and has worked with distributed teams spanning the globe. She is a graduate of Worcester Polytechnic Institute. Residing in New Hampshire with her husband, daughter, and son, they spend their time outdoors and creating new adventures.

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