Service-based businesses depend on keeping good relationships with customers. When clients fall behind on their bills, however, your company’s revenue stream is at risk. That’s why the accounts receivable team is the lifeblood of any business — through their work, they help keep the whole enterprise afloat.
When clients default on their contracts, it’s always possible to enlist the help of collection agencies, but this would hurt the clients’ credit scores. If you’re like me, chances are that you’re big on relationships and prefer to contact your customers directly to see if you can work out a mutually-agreeable solution. Broaching the subject of outstanding bills with customers can maximize your business’s chances of getting paid.
Understanding the stakes
First and foremost, accounts receivable staff need to understand why billing conversations with customers are important.
Many companies have a policy in place that states if a customer hasn’t paid for a specific period of time, they, unfortunately, have to stop providing service for that customer. As a result, any co-workers who were on the account could go without income or be paired with different clients who can pay for their services. If the accounts receivable team doesn’t do their job and avoids having these difficult conversations, they might get paid themselves, but another worker at the company might not.
In my experience, accounts receivable staff members become more willing to engage in potentially awkward discussions with customers when the situation is framed in these terms. It’s not about them — it’s about taking care of others. If they fail to collect, someone else won’t get paid. There’s a lot riding on the outcome.
Caring for customers
Next, accounts receivable staff should be trained to practice active listening during billing conversations and open up a dialogue for any clients’ questions or concerns. The caveat is that there’s no one-size-fits-all strategy to approach this. Each client needs to be met where they are on a case-by-case basis, which requires hearing, understanding, thinking, and solving problems. If errors popped up during the billing process, they need to be escalated, audited, and reconciled as needed. If there is an issue with a staff member, you have to make things right.
Sometimes, accounts fall into arrears because the clients are experiencing cash-flow issues. This is common with clients in real estate, for example. Agents rely on deals for income, and they often need to wait for closings in the pipeline to go through. In cases like these, it pays to be flexible, grant an extension, and set up a new payment date that works for them.
Hear what customers aren’t saying
However, some clients aren’t willing to come out and confess that they’re having liquidity problems. Maybe they even find themselves on the brink of bankruptcy, which is why it’s necessary to understand not only what the client is saying, but also what they might not be saying.
For this reason, I suggest training your staff to glean messages from clients that go beyond what they are willing to say. Remember that your customers are human, and it’s important to have sensitivity and compassion for that which they might not want to admit.
If your staff gets a feeling that the client is embarrassed about something or isn’t being entirely forthcoming, they should try to anticipate their needs and provide help. For instance, if the customer doesn’t have the funds at present, work on some potential payment plan options with them, depending on your company’s policies. Still, when a pattern develops in which a given customer doesn’t operate in good faith and meet their obligations, you must assess whether or not to continue service for them and incur further losses.
Communication and collaboration
Communication and collaboration are the keys to effective conflict resolution in matters of billing. In this way, your accounts receivable team should position itself in the middle between the clients and the business, assisting both with their needs. If you do right by your customers, you also help protect everyone else in your company.
— Angelica Tan is the Senior Director of the Accounts Receivable Division at Cyberbacker, the leading provider of virtual assistant services worldwide. Tan has demonstrated exceptional leadership skills and a deep understanding of customer service and financial operations. Her expertise lies in devising and implementing efficient and streamlined billing strategies to ensure accurate and timely invoicing, payment processing, and revenue collection. She possesses a comprehensive understanding of billing regulations, compliance requirements, and industry best practices, allowing her to easily navigate complex financial landscapes. At Cyberbacker, she is known for her exceptional analytical abilities, enabling her to identify revenue leakage, streamline workflows, and implement effective controls to optimize cash flow, enhance operational efficiency, reduce errors, and improve customer satisfaction.
