There is, perhaps, no corporate position that has undergone more changes in responsibility than that of a Human Resources (HR) manager. Often among those changes is the added responsibility of operating accounts receivable (A/R).
These professionals are regularly charged with recruiting, maintaining a safe environment, enhancing employer/employee relationships, setting guidelines for compensation and benefits, and overseeing labor law compliance. They are also the most adaptable and willing to take on new responsibilities.
The role, which is certainly growing, entails providing proper training and the tools necessary to help employees succeed, requiring a knowledge of new technologies that can increase capacity without necessarily increasing overhead.
This responsibility and others reflect the ongoing transformation of HR departments and the fact they must be leaders in modern thinking and contribute to enhancing a company’s profitability. This is especially true of small companies that are constantly thinking of ways to cut overhead without losing day-to-day efficiencies.
The Importance of A/R
There is nothing more important for these smaller companies than being able to enhance their A/R management. Keep in mind that these companies frequently gauge profitability on a weekly and monthly basis. Clearly, this is unlike larger corporations, which look at A/R results on a quarterly or yearly basis.
HR departments are now bearing the brunt of this important process, and many have turned to technology for the answers.
Many companies are faced with challenges associated with getting paid for their efforts. In short, managing A/R can be a nightmare. Making collection calls is an unpleasant activity, and sending out invoices and follow-up reminders is monotonous and stressful, taking up valuable time. Late payments become a total drain on cash flow and are one of the reasons businesses run into financial hardship.
HR to the Rescue?
The onus, in many cases, falls on the HR manager to solve the problem.
Intuit QuickBooks recently completed a global study titled “The State of Small Business Cash Flow.” The results were frightening, showing that managing A/R is one of the most neglected business disciplines. Here are some of the findings:
- 69% of small business owners are kept up at night with concerns about cash flow.
- One-third of small businesses have more than $20,000 in outstanding receivables.
- The average outstanding A/R is $53,399.
- Only 53% send out invoices on a specific date.
It’s no surprise there is a high failure rate for start-ups. So, what can be done to make sure these small business owners can get a good night’s sleep?
Tips for Managing A/R
Here are the top 10 tips for managing A/R and a guideline for HR executives as they implement new and effective systems:
- Make sure your customers understand that, as a business owner, you take collections seriously. That starts with the initial conversation. You provide a product or service, and your customers are expected to pay—on time every time.
- Send your invoices out immediately when they are created. Do not delay.
- Offer incentives for early payments, and reward positive behavior.
- Enforce your payment terms, and always send a reminder on the due date.
- Routinely follow up as your invoices become past due.
- Assess late fees. It will deter bad behavior.
- Make it easy for your customers to pay when and how they want. Just because you are open 9 to 5 doesn’t mean that’s when it’s convenient for them to pay.
- Offer multiple payment methods (credit, debit, ACH).
- Automate the busywork.
- Be consistent.
For small businesses, this list might seem like a tall order. And let’s face it: Making those collections calls is a task no one wants to perform. But in order to run a successful business, managing your A/R (efficiently) is a necessity.
Luckily, small business owners can now leverage systems like Biller Genie to automate most—if not all—of these tasks and streamline A/R. These systems act as a “virtual assistant” that make billing, invoicing, and collections disciplined priorities, which helps improve cash flow. Equally as important, by automating busywork, you free up administrative departments to focus on what’s important: growth.
In short, small businesses that take A/R seriously are more profitable. And along the way, owners will get much-needed sleep, thanks to the solutions provided by forward-thinking HR departments
Thomas Aronica is CEO and Founder of Biller Genie, a leading developer of innovative features that automate the invoicing and A/R processes.