How well your operation manages receivables impacts your ability to scale your business. Scaling a business comes with any number of challenges. Everything from supply chains to human resources to product development has to be more efficient and effective to keep up with increased demand.
When it comes to accounts receivables management, a significant increase in volume will likely lead to more manual work, inaccurate invoices, revenue leakage, and frustrated customers, all of which can stunt your growth or even send you backward. How your accounts receivables department is set up to handle growth can make the difference between barely keeping billing and collections covered and having the adequate cash flow to scale your business.
A sound strategy and understanding of potential pitfalls can help your billing and collections operations scale with revenue without missing a beat. However, before revamping your accounts receivable management strategy, there are a few key questions you should consider first.
Is your accounts receivable function elastic?
There will be weeks when you’re at 50 percent of your billing capacity, and there will be weeks where sales double and your process is overwhelmed. You need an accounts receivable management operation that can increase or decrease capacity depending on needs and do so quickly.
Whether through technology or talent, you need to provide a customer experience that is consistent and accurate. Invoicing is a primary touchpoint between you and clients. Not investing in it is a missed opportunity.
Are you prepared for the future?
The accounts receivable process has, like most parts of business, greatly evolved as technology changes how we do almost everything. Failing to embrace the future very well may cost you financially or leave you less competitive in the marketplace.
Is your receivables department equipped to handle the future? Assess your current processes to identify inefficiencies. For example, can your current solution use AI to forecast when you’ll receive payments? Or, is it more intransigent and tied to how things have always been done?
If you find your organization isn’t using the latest technology, you’re already behind the curve. Advanced accounts receivable management systems offer the latest tools needed to modernize your processes while maintaining flexibility to grow and change with your business over time.
Are legacy systems holding you back?
Maybe you want to embrace that new technology, but converting your old accounts receivable management workflows to a new platform is technologically impossible. Perhaps your current setup is a mishmash of legacy systems. These systems may sort of work for your organization’s current state but can buckle under an increase in volume.
If legacy systems are holding you back from embracing the future, it’s time for an overhaul. It may require acquiring new technology or talent, but it will be far more painless to do in the growth stage than during maturity.
Are you making the most of automation?
One of the most important things you can do to keep up with an increase in billing volume is to automate what used to be done manually. Nearly every aspect of accounts receivable management, such as dunning, forecasting, payment acceptance, reporting, and more, can be done with a one-time setup, potentially saving thousands of man-hours and an untold amount of dollars.
At a low volume, you can still keep the personal touch that comes with billing by hand. However, that’s just not realistic as invoices increase. Instead, you can keep up with customer demands by automating certain accounts receivable management tasks.
Are you reporting the right metrics?
At a low volume, it’s fine if your billing operation is tracking on the basic metrics, like days outstanding. However, a larger operation should take advantage of advanced metrics that provide a more holistic view of how your accounts receivable management function performs.
A sophisticated approach would include reporting on metrics like:
- Sales by Item - A detailed look at what products were sold and how much
- Accounts Receivable Aging - How long have overdue accounts been so?
- Billing Communications - How many emails have been sent regarding late payments? How many phone calls or letters?
Are you able to effectively integrate new talent?
An increase in billing volume will undoubtedly create the need for an increase in headcount. How effective can you be at bringing new talent in, integrating them into your organization, and quickly getting them up to speed?
This could be a significant amount of new faces, and maintaining governance and security will be paramount.
Scale accounts receivable capabilities with Invoiced
These six considerations for scaling accounts receivable management aren’t the only things to think about as you set forth on your rapid growth journey, but they’re certainly among the most important for keeping pace with the overall size, speed, and scale of the business. The best CFOs, accounting managers, and financial operators will have answers to these questions before their CEOs ask them. Learn how Invoiced’s accounts receivable management software can provide the answers you need. Schedule a demo today.