As a company shifts to electronic payments, its relationship with each customer should guide its approach. Best practices include:

For new customers, encourage adoption of electronic payments during the on-boarding process.
For existing customers, continue to recommend the transition. Consider offering incentives or disincentives, such as extra services or fees, to convince reluctant clients to make the switch from paper.

2. Optimize the client experience.

As a growing share of the labor market consists of young people, whose preferred payment methods are electronic, companies need to be offering customers in this demographic the ability to pay in a way that aligns with their expectations. Treasury teams should be analyzing their current receivables solutions and investing in streamlining processes. This review may include:

Payment methods' ease of use. The easier it is for clients to make payments, the more likely they are to do so. Start by giving customers the option to pay immediately via credit card, checking account, or app.
Payment methods' compatibility with customer preferences. Enabling customers to use their preferred payment method can help maximize adoption. Consider adding digital wallet, kiosk, mobile, pay-by-text, and/or real-time payments.
Degree of automation. Automating customer invoicing involves sending notifications directly to customers' A/P teams via email or EDI. Treasury teams should ensure the company is sending invoices to the right place by verifying the A/R team has complete and current contact information for all customers.

3. Re-evaluate the company's credit strategy.

During the pandemic, many organizations saw more late payments and delinquencies. In response, management may have directed the A/R team to adopt more aggressive collection techniques and to allow for alternative payment channels to collect funds. They may not, however, have revamped their overall credit strategy. It's now time to do so.

Instant Insights /

How to Upgrade Your Accounts Receivable Strategy

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