ACCOUNTS RECEIVEABLE- Week 4.pdf

ACCOUNTS RECEIVEABLE WEEK 4- CUSTOMER RELATIONS, TECHNOLOGY IN ACCOUNTS RECEIVABLE & MANAGING YOUR BOSS CUSTOMER VISITS Why Visit a Customer? There are many good reasons to visit customers. For starters, once there is a personal relationship, t...

ACCOUNTS RECEIVEABLE WEEK 4- CUSTOMER RELATIONS, TECHNOLOGY IN ACCOUNTS RECEIVABLE & MANAGING YOUR BOSS CUSTOMER VISITS Why Visit a Customer? There are many good reasons to visit customers. For starters, once there is a personal relationship, the customer is more likely to pay its bills in a timely manner. Additionally, if times are tough, it is likely to be the vendor with the strong relationship that gets paid first rather than the one with the unfriendly one. Additionally, many accounts receivable personnel say that they can learn many things in person that cannot be communicated over the phone or by mail. Often, an inadvertent remark will fall from someone’s lips when you spend a little bit of time with them. For starters, when walking through the offices, the AR personnel will see whether the offices are in good repair or not. This is something that is more useful after several visits. A company that always kept pristine offices with impeccable landscaping is only likely to let those things go if money is tight. Another advantage of visiting is that frequently financial statements that never seem to make it to the mail can be picked up. It’s not that the customer doesn’t want to provide them—they just somehow never get sent. Customer visits are a good time to resolve disputes, settle unauthorized discounts, and get to know the accounts payable manager at the company.  Customers’ Accounts Payable Contact Many AR professionals overlook the importance of establishing a good relationship with a professional in the customers’ accounts payable departments. The value of these relationships should not be underestimated. Since few people bother to treat those in accounts payable as though they mattered, those who do reap the benefits. The accounts payable associates often have the ability to move your payment date up —or schedule it at a later date. Once you find someone who is helpful, write that person’s name and phone number down for future reference. Then, when there is a problem in the future at that company (and you know, it’s only a matter of time until there is another problem), contact your trusty reference for a quick resolution. If the individual has been exceedingly helpful, it might not be a bad idea to send a card or small gift at Christmas.  What to Bring Don’t go empty handed to the customer. While your goal is to get to know the people you will be meeting, you will also have some business issues to attend to. You also don’t want the customer to ask a question you can’t answer, or put you on the spot by providing inaccurate information. For example, if the customer claims it always pays on time, you should be able to whip out your trusty aging report to back up your claims of invoices that are past due. In the best of all worlds, bring: A current, detailed statement of the customer’s account Copies of pertinent correspondence since your last visit Notes you took during your previous credit visit Documentation of all disputes that you wish to discuss  What to bring? With this information you should be armed with the ammunition you need to discuss the customer’s account and to refute any inaccurate claims the customer might make. Don’t let the customer put you on the spot. You do not have to answer very question or request that the customer makes, if you do not have adequate information with you. You can get back to them. TECHNOLOGY IN THE CREDIT AND COLLECTIONS DEPARTMENT Technology has made a massive difference in the way credit and collection functions are handled. Personal computers and use of e-mail are now commonplace in virtually every credit department, and that’s just the beginning. In Today’s AR Departments Technology has been a lifesaver to AR professionals who are faced with an ever-growing workload and no additional resources to handle the increased responsibilities. TECHNOLOGY IN THE CREDIT AND COLLECTIONS DEPARTMENT Some of the best techniques that were reported were: 1. Develop reports that help staff members maximize their time by prioritizing their workflow. 2. Send reminder letters 30 days after the initial invoice via e-mail. AR professionals report that e-mail correspondence is more effective because customers tend to respond quicker. 3. Implement new accounts receivable database systems to report on sales and accounts receivable balances efficiently. TECHNOLOGY IN THE CREDIT AND COLLECTIONS DEPARTMENT 4. Upgrade computer equipment. 5. Automate invoicing and email to the customer. 6. Integrate new software that distinguishes a customer’s credit limit in conjunction with the age of outstanding invoices. 7. Improve communication with both customers and the sales department by using e-mail. 8. When taking over a group using more than one computer system, say as a result of a merger or acquisition, convert everyone to one system, communicate between brands, and treat all customers uniformly. 9. E-mail, e-mail, e-mail. Technology is the answer to AR professionals’ prayers, because it enables departments to do more with less. ELECTRONIC INVOICING Electronic invoicing is the delivery of invoices, most likely over the Internet, to a customer’s accounts payable department in electronic format. No paper is received—although the invoice can be printed at any time—and the accounts payable department can then forward the invoice, via e-mail, to whoever needs to approve it. The information is then also available, without further keying, to be housed on a network for data retrieval. If it is combined with electronic payments, the information is then forwarded back (without rekeying!) to the vendor. E-MAIL STRATEGIES THAT WORK Any communications—including internal with other departments and employees within the AR department and external with customers, service providers, and others in the credit field To contact buyers and research customer information As a follow up to phone calls, or emails To send and receive credit references Multinational companies, finding it difficult to communicate via telephone due to time and language differences are turning to e-mail for help. It is being used to send timely inquiries and responses and also to reduce paper flow To send customers copies of requested information such as invoice copies To communicate with customers’ accounts payable departments regarding unpaid invoices and unearned cash discounts E-MAIL STRATEGIES THAT WORK To communicate with sales reps regarding past-due customers To request new and updated financial information from customers To contact people you cannot get on the phone To send reminders and collection letters To send notification letters and exchange information with customers To reconcile accounts and send spreadsheets by e-mail to customers for that purpose To share credit information with subsidiary companies To communicate with sales reps as well as collections and accounts receivable personnel in remote locations E-MAIL STRATEGIES THAT WORK To replace any or all types of communications that are sent via mail or fax To receive Internet news about both customers and related industries To resolve issues that are causing customers not to pay in as quick a fashion as possible Instead of calling some large customers, use e-mail to request status of payments, either before they are due or if they are late To enlist the help of the sales reps with a problem on an account To resolve any deduction issues and properly apply cash E-MAIL STRATEGIES THAT WORK To communicate with large customers regarding late payments (There is less room for error if they see the past-due notice rather than copying them down from voice mail. It is also more confidential than faxing) To assist with export customer collection problems To obtain information on credit and collection topics To send invoices to those customers who agree to receive invoices via e-mail To send documentation to customers for contracts To receive incoming orders from the field and reply where necessary WHY IS ELECTRONIC INVOICING ATTRACTIVE? In addition to the elimination of mountains of paper, accounts receivable professionals like electronic invoicing because: It eliminates mistakes due to rekeyed information. There are currently fears about the mail. It makes the workflow to route invoices for approval a no brainer. It reduces costs. It makes it difficult, if not impossible, for others to blame the mail for their own shortcomings in processing paper. USAGE So, you ask, if this is such a great deal, why aren’t companies signing up en masse? The obstacles include: Cost Implementation time Budget constraints Internal resistance to change Lack of ease of use Difficulty in signing up partners Fear ELECTRONIC DOCUMENTS Electronic documents are the future medium for commerce. Given all the changes in the last few years, the use of electronic documents has taken on new dimensions. Computers communicating with each other now conduct the growth of commerce, not humans using phones or the written word. The exchange of electronic business documents facilitates this. A standard for these documents that would ease the transition to e-commerce is starting to emerge and is enabling the increasingly sophisticated use of electronic documents. GETTING AHEAD: MANAGING YOUR BOSS Why do some AR personnel seem to get ahead much more quickly than others? The answer is not complicated. Successful personnel realize that it is not enough to simply perform above expectations. Doing a great job is only half the battle. These respected personnel also carefully manage the relationship with their bosses, recognizing that they will never get anywhere if their bosses do not like them, suspect them of being disloyal, or do not respect them. They actively manage the relationships with their superiors. GETTING AHEAD: MANAGING YOUR BOSS Here’s how they do it: Walk a mile in his shoes. Understand that your boss’s priorities may be very different from your own. Take the time to reflect on the problems that your boss faces. Then frame your requests and plan your actions in a manner that will help resolve your boss’s problems. If you are aware that your boss is constantly in conflict with the chief financial officer (CFO), don’t ask him or her to take an unpopular proposal to the CFO. Rather, recommend a change in procedures that the CFO is likely to agree with. By putting your boss in a position where he or she can look good, you will have taken the first step to building a better relationship. There will be times when it is necessary to ask for approval for an unpopular proposal. However, if you lay the groundwork by recommending actions that are in line with the CFO’s way of thinking, you will be a little closer to getting the approval you need. By keeping any problems your boss may be encountering with his or her boss in the back of your mind, you may be able to position your unpopular request in a way as that makes it more palatable to those reviewing it. GETTING AHEAD: MANAGING YOUR BOSS Communications. Good communications is key to building a productive relationship with your boss. This means relaying not only the good news but also the bad. Negative reports about you, your department, or one of your staffers should come from you rather than someone else. By relaying the news yourself, you minimize its impact. This also gives you the opportunity to couch the news in the best possible terms. It also allows you to explain any extenuating circumstances before your boss sees red. Notifying your boss of any problems puts him or her in the best position to respond when someone higher in the chain raises the problem. If the company’s key customer is upset and is threatening to call the company president, let your boss know in time to prepare for it. By providing the facts, you will help him or her respond intelligently when the inevitable call comes from the president. Another benefit to good lines of communication is that you will know what your boss’s priorities are. This will help you when making proposals GETTING AHEAD: MANAGING YOUR BOSS Manage upward. Successful realize that they have to manage the relationship with their bosses. They begin this by proving they are loyal. Building trust is crucial to any good alliance and usually takes time. If your boss perceives that you are not loyal to him or her, it will be virtually impossible to build a good relationship. Thus, it is imperative that any time you do something that would show such loyalty, you relate the incident to your boss. You will want to find a way to work it into a conversation without sounding too obsequious. One of the ways that credit managers show their loyalty is practicing discretion in their conversations. Problems in the department should be kept within the group—especially if the problem is likely to embarrass your boss with his peers. The same goes for any mistakes your boss may make. Once you have proven your loyalty, you will be in a position to disagree should a difference of opinion arise. Such clashes should take place in private. If you choose to initiate such discussions in public, you inevitably will lose the battle and find yourself uninvited to future events where you would have the opportunity to showcase your talents. Not only will you suffer, the whole department will suffer as well. GETTING AHEAD: MANAGING YOUR BOSS Yes, it takes time to build a good relationship, but the time invested in such an endeavor will pay off both for you and your staff. Credit managers who invest the time to manage their relationships with their superiors will find their upward mobility increasing.