What’s the Best Way to Automate Your Billing and Collecting Process?

Billing and collecting efforts sometimes seem like the bane of our existence. As a lessor or originator, you know the ability to successfully invoice your customers and collect on your accounts receivable is a key performance indicator. How can an automated billing and collecting process help you?

First, understand that automating the billing and collecting process does not mean eliminating human contact. It means automating certain parts of the billing and collecting process, to allow your team to focus on the human aspect of the process.

Technology can generate electronic invoicing, payment reminders, and past due notifications. This will allow your team to focus its efforts on customer outreach, to understand the cause of payment delay, and create a plan with the customer to collect the outstanding amount.

It’s critical to create a collections culture which communicates the importance of timely payment to our customers, while continuing to foster a relationship of mutual respect and value.

To help build that culture, here are some principles that your billing and collecting team might find useful to keep in mind:

The team should approach every customer trusting that they want to make timely payment. Customers should be allowed a certain degree of understanding because mistakes occasionally happen over the term of a contract. However, when a customer repeatedly misses payments, this trust is broken. The team needs to emphasize the seriousness of the situation and pursue a payment resolution with planned milestones.

Although most contracts allow for a grace period, payment amounts should be received on or before the due date. This expectation needs to be set for all collection efforts and in communications with the team, partners, and customers.

The team needs to review all open amounts by customer across the entire portfolio and set a plan for collection. A customer with a net remaining balance of $3MM is of much more importance than a customer with a net remaining balance of $30K. A customer that is missing payments early in the term is more concerning than a customer with a strong payment history that accidentally misses a payment, so track record is an important consideration as well.

An escalation plan for accounts past due must be consistent in how accounts are treated, with certain actions taken at different stages of the delinquency. It’s also helpful to establish two separate yet similar escalation plans depending on whether the account is past due for the first time in their history, or if the past due is a repeat occurrence. Be sure your team is familiar with the details of both scenarios, and that the execution of the plan is in sync with your team’s culture.

If you want to learn more about automating your billing and collecting process, feel free to contact us.