Within Australia’s largest manufacturing sector are companies executing the gold standard in accounts receivable management and credit control. That’s not unexpected. After all, it’s a sector that relies on good cash flow and efficiency across the board to realise its revenue and growth goals.
For the financial controller, quickly recovering the money the business is owed means one less headache. After all, cash in the bank is better than cash on the books.
At ezyCollect, we’ve helped Australian food and beverage manufacturers, wholesalers and distributors achieve the gold standard in accounts receivable management
Here we’ve collated the most common feedback our food and beverage customers give us about what gets them paid faster, easier and more.
1. Check credit history before offering terms
It’s important to know who you’re trading with otherwise you risk being blindsided by a customer who never pays or constantly pays late. The good news is that a credit reporting agency can provide you with a credit history report before you finalise payment terms with a new customer.
Depending on the business credit check you order, you’ll find your customer’s risk rating* for late payment and even business failure. The next step is to issue credit terms based on your due diligence assessment. Shorten terms for medium-to-high risk payers and monitor their payment behaviour.
For ongoing vigilance, set up a credit risk monitoring service. You’ll receive email or sms alerts to any significant credit activity your customer registers in the market.
*Customer credit risk ratings are due for release in ezyCollect in October 2019.
2. Know when and how you will follow up
“Get more structure around the collections process.” At ezyCollect, this is the number 1 desire we hear from our food and beverage customers.
What they’re saying is that their ad hoc follow-up, inconsistent messaging and irregular allocation of resources are delaying their cash collection.
Instead, enable a workflow of follow-up activity that is known and consistent. For example, send a reminder email on Days 2 and 7 after an invoice becomes overdue, then a phone call on Day 10. Following up also gives you the opportunity to uncover any issues with the order or your customer’s ability to pay. This way, you can proactively head off late payments before they turn into bad debt.
3. Prioritise customer service
While customer service isn’t typically the domain of the accounts department, it can and should be!
Your customers are busy, too. Don’t be surprised that they are looking for a convenient accounts payable experience with you. For modern companies, that looks like receiving emailed statements, self-serve online payments, and the option of a payment plan.
4. Document your credit policy
The decades-old family business is at particular risk of hanging on to legacy practices that no longer work for the modern company. Write down your credit control and collection policy so that you’re compelled to consider a wide range of principles and actions you’ll stand by to keep your customers to terms.
What’s more, your customers get a fair opportunity to comply with your credit policy if you share a documented policy with them.
5. Ditch the paper trail
“We were printing off ledgers and by the time we got to making follow-up calls, we needed to reprint them,” said a health products distributor.
Instead of a paper trail that quickly becomes outdated, rely on a digital database that updates as often as you need it and allows you to track invoices and keep a comprehensive audit trail of debtor management activities.
6. Ramp up the quality of your communications
Be prepared with reminder email templates and collection phone call scripts so that when you follow-up customers, it’s with care, politeness and a plan.
You might need to train your staff on how to communicate effectively, but it will be worth it when your payment reminder emails help you get paid, avoid legal action, and retain your customers.
7. Automate to save time
Many food and beverage suppliers issue a large volume of invoices per month, often multiple invoices per customer. Financial controllers can now automate the issue of new invoices, tracking them, following-up on outstandings, and allocating payments—to save literally hours each day.
“When reminders automatically go out, it requires less manpower from the business,” says a craft beer manufacturer and distributor.
8. Increase your productivity not your headcount
Software solutions help your existing team get more done. Credit controllers often tell us they are stressed out by the volume of work they are expected to complete. Each month, the relentless pressure to collect money repeats as the end of the month draws near and invoices remain outstanding.
ezyCollect users tell us that automation software was a much more cost-effective solution than hiring more people. Plus, it freed up their team to do more meaningful tasks.
9. Offer an online payment portal
A payment portal allows your customers to view all their invoices digitally, pay one or more in a single online transaction, and complete their payments without needing to ring you up to process their credit card during office hours. An online payment portal essentially extends the opening hours of your receivables department to 24/7.
10. Outsource so you keep collecting
If your internal efforts have not been successful, you can always get help from the experts. A debt collection agency can start with sending a letter of demand on your behalf, or they can undertake the phone call follow-ups and negotiations for you.
The final word
Getting the collections job done doesn’t need to be painful. In fact, getting the collections job done right could become your competitive advantage.
ezyCollect’s integrated platform for accounts receivable and credit control is helping food and beverage suppliers achieve the gold standard in accounts receivable management.
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