4 Process Areas You Can Optimise Now To Get Paid Faster

Managing clients to pay on time remains a huge hassle for most organisations. As per a 2015 survey by a UK-based collection agency Hilton Baird, the invoices are being paid 22.5 days beyond the established terms on average. Delayed collection impacts the business adversely.

If you wish to get paid fast from customers, start optimising these four areas.

1. Credit & Collection Policy

A credit and collection policy offers clear and defined guidelines. This includes

• setting the terms & conditions for supplying goods on credit, 
• qualification criteria for customers, and
• the collection process. 

Having defined credit limits of each client and payment terms ensures smooth functioning even when the key person is absent. Credit policy This policy should in addition contain processes to be used in case of delinquencies. 

Credit policy needs to be formulated based on the customer’s credibility and risk profile. For existing clients, history and behaviour become the basis for formulating a policy. 

In the case of new clients, information from the market or industry must be sought. Annual or bi-annual reviews of credit limits and payment terms are necessary. Reviews help organizations to keep credit policy up to date.

2. Customer Master

Customer master contains a variety of information like :

• Address
• Owners,
• Contact details,
• Credit limit, and
• Payment terms, among others. 

Customer master is created during the onboarding process. This information is vital as it allows business processes to function smoothly. 

All departments of an organization can retrieve this data with the click of a button. This eliminates many manual processes and wastage of time. In light of this, any error in the masters can cause trouble. 

• An incorrect credit limit will impact cash flow. 
• Incorrect customer address or email ID will result in sending invoices to the wrong person. 
• Incorrect tax details like GST or TDS can lead to the inability of the customers to avail of tax inputs.

3. Invoice and Billing

It takes a long time to manually send paper invoices. An automated billing solution will speed up the invoice process.

Automating invoice and billing processes assists in the smooth functioning of other processes. It should be a priority because it eliminates manual intervention. 

Even though the billing process is one of the easiest processes, many organizations struggle with the same. 

It has been observed errors occur due to the wrong units of measure, price, or incorrect entry in customer master. 

Failure to generate invoices on time can lead to delay in collections. 

Many automated billing systems offer a feature to notify the customers of an upcoming payment or overdue payment reminders. 

4. Recording Collection Process

Diligence must be exercised while creating invoices so no time and effort are wasted on reissuing or amending previously issued invoices. 

One of the most effective practices in this regard. Is allocating the amount collected from a client to the specific invoice rather than crediting it to the ledger. 

This will help us to ascertain specific pending invoices as well as easy account reconciliation. By improving the recording of the collection process we can improve its efficiency.

By optimising these four processes, we can ensure better collections and thereby getting paid faster from clients . Seeking a professional to streamline these functions can help improve the profitability of an organisation.

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