High performance AR management is the cornerstone of greater profitability
Accounts receivable (A/R) is the amount that customers owe a company for goods and services that have been provided. Traditionally this is typically accomplished by generating an invoice and delivering it to the customer under pre-specified payment terms.
Businesses establish payment terms in different ways and for different reasons (some are industry driven, many are competitive driven decisions). Yet today AR departments nationwide are being viewed strategically to deliver competitive advantage and greater profitability. Enterprises of all sizes will need to take a fresh look at their payment acceptance policies and terms, their operational expenses and their payment risk in order to accomplish this task.
Too many small and mid sized businesses are not taking advantage of the technologies and services available to transform their current paper based processes. They are not taking advantage of the growing use of business debit and purchasing cards, of electronic invoicing and payment options or new trade credit management tools.
Payment policies play an important role. For example, when should you extend trade credit and when should you steer transactions to card payments. Do you consider if it's a new customer or perhaps the size of the invoice? How are you comparing and what factors are you considering to make this decision? How do you approve a customer for a trade credit account limit, when do you raise the limit or more importantly how do you monitor the outstanding credit lines you are extending? What risk do you take extending trade credit? How do you finance your trade credit and at what cost?
Payment technologies play a key supporting role to the policies you are trying to implement. How you extend credit, manage credit, send invoices, process incoming payments, record and reconcile and recover and collect debt, are all influenced by the systems and solutions you implement and use. These technologies impact your operational expenses and the expenses associated with accepting, securing and processing payments.
Companies that better manage the types of payments they prefer to accept with the technologies they choose to use to distribute, collect and manage their accounts receivable will win the day. Give your staff the tools they need to succeed.
Schedule a consultation with a Vantage Payments Advisor today.