- Keep customer contact information updated. …
- Integrate a structured credit approval process. …
- Send the invoice as soon as possible. …
- Send reminder emails. …
- Set earlier due dates. …
- Automate your billing process.
Accounts Receivable and Accounts Payable
18 examples of accounts receivable goals
Here are some examples of account receivable goals and objectives:
1. Keep customer contact information updated
Your customers might not receive the invoices you send them if their contact information has changed. Make it a habit to ask vendors for their contact information when they place orders. Having multiple methods of contact, such as email and mail, can also be helpful because you can follow up using additional contact information if necessary.
2. Integrate a structured credit approval process
When establishing a system for credit approval, it’s crucial to consult with the finance and accounting departments because your decision to approve or deny credit for a vendor may have an impact on your revenue. Find out the requirements for opening a line of credit with your business, including override and credit hold situations. By letting your applicants submit their applications using an automated system, you can reduce clerical errors and fight fraud.
3. Send the invoice as soon as possible
In recent years, businesses have been able to process invoices much more quickly, especially when they use online billing. Regularly sending out invoices makes it clear to clients that you value their business and expect them to pay you on time. When demand is high, think about sending invoices at least once every week or even every day.
4. Send reminder emails
Get your customers’ email addresses when you gather their contact information. You can use their email to send them reminders when they have a payment due or if they miss their payment, even if they prefer paper billing. Every time a customer places an order, scheduling automated payment reminder emails can streamline the process and give them the option to unsubscribe.
5. Set earlier due dates
Payment terms differ from company to company, so you might experiment with a few to see which produces the best results. Net 60 invoices permit customers to pay within 60 days. This strategy may give clients who receive large invoices the time they need to pay the debt. Vendors, however, sometimes forget about small bills with a protracted due date. This problem can be reduced by issuing invoices with terms of net 60 or even net 10.
6. Automate your billing process
By streamlining invoicing procedures, businesses can avoid billing mistakes that could lead to major issues like incorrect payment amounts and undeliverable invoices. Companies can easily send invoices to clients thanks to billing automation, and a variety of software solutions enable direct payment from the invoice. Even if some of your customers still prefer paper bills, automated solutions can help you run a more effective system than manually handling all of your accounts receivable.
7. Apply cash payments to accounts immediately upon receipt
If you accept cash payments from your customers, it’s crucial to credit their account as soon as you receive them. Unassigned cash has the potential to go missing or be added to the wrong account, unlike checks and credit cards that are linked to a specific customer by identification information. Keeping your cash payment system organized and preventing loss can both be accomplished by daily or weekly cash deposit.
8. Give customers multiple payment options
Most businesses prefer doing business online, but some would rather pay their invoices with cash or checks. Customers can, for instance, use some software to pay with a credit or debit card, an ACH bank draft, or by mailing a check. It is more convenient for customers to pay their invoices if you use a billing platform that enables you to send invoices and accept various payment methods.
9. Check for accounts receivable errors regularly
Keep a record of all criticisms, mistakes, and issues with your accounts receivable procedure. After that, you can take care of them frequently to keep your system running smoothly. Keep a record of the changes you made in case you run into them again in the future by planning accounts receivable maintenance for a specific day and time of the week.
10. Create a system for resolving billing disputes
Almost all businesses deal with disputed invoices, and having a set procedure in place for handling them can result in happier clients and more paid invoices. Before delivering a good or service, keeping the vendor informed of the terms of the deal enables them to voice any questions or concerns prior to receiving an invoice. Explain each line item on the invoice in detail and provide an alternate resolution, such as a payment plan, if the vendor contests your invoice.
11. Bill your customers electronically
Your team’s accounts receivable process is streamlined when you bill customers online because it’s quicker and simpler to send invoices. Additionally, it simplifies record-keeping and eliminates delivery problems brought on by mail-order billing. Send notices to vendors who prefer paper invoices informing them of the upcoming switch to paperless billing if you have any. Give them your phone number so they can call you if they have any questions.
12. Take steps to avoid using a collection agency
Companies that receive a lot of unpaid invoices occasionally turn to collection agencies for assistance in recovering debts. Despite the possibility of success, collection agencies demand a sizeable commission from the settled invoices. Creating a system for customer follow-up increases your likelihood of receiving payments without having to pay someone else. For instance, some businesses begin by calling or emailing vendors as soon as they miss the billing due dates before escalating to other strategies, like site visits, to recover unpaid invoices.
13. Update your current credit policy
As businesses expand and when the government modifies regulations governing the credit industry, credit policies frequently change. By periodically reviewing your credit policies and making any necessary modifications, you can avoid problems caused by out-of-date credit policies. You might think about updating the benchmarking, escalation, and credit scoring aspects of your credit policy.
14. Improve the process by finding the origin of the problem
Fixing recurring issues may appear to be simpler as you come across them, but it frequently takes more work over time. Additionally, it increases the likelihood that data entry and billing procedures will be inconsistent if multiple people are using the same piece of software. Finding the source of a problem in your system, fixing it there, and preventing it from happening again in the future can help you avoid similar problems in the future.
15. Provide accounts receivable personnel with training on credit laws
When providing customers with a credit line through their business, businesses have a duty to uphold all applicable federal and state laws. Because of how frequently these laws change, it’s crucial to keep the accounts receivable staff informed of all pertinent rules. Federal credit laws every accounts receivable professional should know include:
Some states also established credit laws. To ensure that employees stay up to date on regulatory changes and adhere to legal requirements for granting credit, businesses should think about offering personnel training on both federal and state laws.
16. Reward and encourage accounts receivable teams
Accounts receivable work can be challenging, especially when dealing with billing issues or mistakes. Teams working on accounts receivable put a lot of effort into overcoming these challenges and maintaining the flow of revenue into businesses, and their accomplishments deserve praise. Regularly praising and rewarding your team boosts morale and motivates individuals to succeed.
17. Adjust bad debt reserve calculations on a schedule
Many businesses keep a reserve for bad debts to lessen the impact of unpaid invoices on revenue. Every time a customer has an unpaid invoice, these funds enable businesses to account for a specific proportion of the loss associated with billing without having an impact on revenue. The accounts receivable team calculates their percentage of bad debt in order to determine how much should be placed in a bad debt reserve. In order to prevent losing money, review your bad debt reserve at least once a year and make any necessary adjustments. This is because a company’s bad debt amount fluctuates as a result of changes to the business’ operations.
18. Review credit lines to maximize revenue
Monitoring your vendors’ credit lines may help you generate more revenue because they have an impact on how much they spend with your business. Higher credit lines may be available to dependable clients who regularly place orders and promptly pay their invoices, which could benefit your business by incentivizing them to spend more. The accounts of vendors with high credit limits or who continue to use their credit line with your business despite a history of late payments must also be disabled.
What are accounts receivable goals and objectives?
Goals and objectives for accounts receivable are concrete plans made by business leaders to support, oversee, and preserve a productive system for collecting debts. While some businesses benefit from the implementation of a new system, others find that their accounts receivable departments could use improvement in other areas. Your accounts receivable goals and objectives can be modified in accordance with the particular difficulties you hope to overcome.
How to set accounts receivable goals
Companies can run their billing and payment collection processes efficiently by setting accounts receivable goals and objectives. The effectiveness of an accounts receivable system is significantly influenced by both long-term and short-term objectives. Your team can accomplish both by using SMART goals to make their goals actionable. A SMART goal is:
Teams can work together to set and achieve SMART goals. For instance, a team in charge of accounts receivable could work with finance to develop new credit guidelines. It’s crucial to document each SMART goal because doing so encourages teamwork and makes it easier.
Example of SMART goal use
Here is an illustration of a scenario where a professional might set goals utilizing SMART techniques.
Anna decided to set a SMART goal for updating the company’s accounts receivable software after realizing that it was out of date. “Find and implement a more efficient accounts receivable software that satisfies both our and our vendors’ billing needs,” she wrote. She made a spreadsheet with the names of software programs and their features so she could compare them with the team to gauge her progress.
Anna set a spending limit for the software and gave herself a 30-day deadline to complete the project to ensure that her goal was feasible. The moment she put the new software in place, it would take care of the immediate problem, save money on labor, and perhaps even boost sales.
FAQ
What is the goal objective of receivable management?
The receivables management is also known as credit management. The goal of receivables management is to increase sales and profits of the company to a point where the return on investment in new receivables is less than the cost of making new receivables investments.
What are the goals and objectives of an accountant?
- Create an A/R Aging Report and Calculate Your ART. …
- Be Proactive in Your Invoicing and Collections Effort. …
- Move Fast on Past-Due Receivables. …
- Consider Offering an Early Payment Discount. …
- Consider Offering a Payment Plan. …
- Diversify Your Client Base.
What can I write as goals on my performance evaluation in accounts payable?
Accurately measuring profit and loss is one of the main duties and objectives of an accountant within a company. This involves gathering information on income and expenses and performing analyses on that information to produce P&L statements that are accurate.
