12.08.2021 | Posted by Erik
How to Collect During the Holidays (from An Outsourced AR Firm)
As an outsourced AR firm, we know firsthand that collecting customer invoices becomes even more challenging during the holiday season.
For this reason, we recommend that businesses take a different approach between November and January to ensure their books are clean and their accounts are paid. But how, right? No one wants to be the Grinch during the holidays, demanding pay and shirking the holiday spirit.
Thankfully, understanding the tendencies of businesses during the holiday season and implementing some best practices can give you a roadmap for navigating collections without becoming a Scrooge.
Unwrapping 6 Holiday Business Tendencies
Here are six things that happen every holiday season to be aware of:
- Everything Slows Down – From the mail service to paying bills, everything slows down during the holidays, so be prepared for some delays.
- People Take A Lot of Time Off – One of the biggest issues during the holidays is that people take a lot of time off. As a result, you might have problems getting in contact with the employees who pay the bills.
- Mail Gets Backed Up – During the holidays, USPS is at its peak with cards and gifts, so a lot of things get bottlenecked and delayed at the post office. Consequently, checks can take longer to make it to you, and cash flow issues could arise if you don’t plan accordingly.
- Customers are Focused on Selling (not paying you back) – Many customers that owe you money are focused on selling during this period. (Black Friday, anyone?) This might be the first time during the year that some companies are actually in the black, so the last thing they want to do is take a collection call that distracts them from selling.
If retailers have past dues with you, it’s important to let them focus on selling during peak season. Give them some time to maximize their earnings first.
- The AR Process Won’t Be As Smooth As Usual – The AR process likely won’t go as smoothly as the rest of the year. Employees will take time off, and some businesses even shut everything down for a couple of weeks, which means their payments will inevitably be slower.
- Trends and Tendencies Vary By Industry – Keep in mind that these trends depend on your customer’s industries. For instance, retail will be very busy during this time, whereas education or technology may not be. This means that you may need to account for additional factors depending on the specific industries you serve.
4 Best Practices for Outsource Accounts Receivable Management
- Be patient – More than usual, practice patience and grace. Give your clients time to sell and know they may be a “slow pay” during this time.
- Create a Plan for January – Have a process in place for January, which is the most important month for collections. Retailers finally have cash on hand, so you want to be top of mind when the new year rolls around. Be ready to make calls and get on top of past-due invoices to keep them at the top of the list for your customers. This is a great time to consider calling an outsource accounts receivable management firm for help.
- Use the Extra Time to Clean Up Your Front End – You’re going to have some extra time, so take advantage of it by cleaning your books. Consider the following steps:
- Write off really old dues
- Clean up your deductions for the end of the year
- Write off any short pays or unpaid freight charges
- Apply credit memos that have been sitting on the books
- Clean up everything that is more than 90 days past due (either write them off, consider outsourced AR, or make a concrete plan to get them paid).
The end of the year is a fantastic time to clean things up and finalize any write-offs, so your books are clean and prepared for tax season.
- Have Some Serious Conversations – If your clients are in the office and the AR person is available, work with any customers that have old outstanding invoices to determine if you’re going to have to write them off before the end of the year.
Have a Happy Holiday Season with Outsourced AR
There’s no way to avoid a slower invoice collection season. But if you know what to expect and put some of these best practices into play, your holiday season can still be merry and bright.
If you don’t want the added hassle, consider an outsource accounts receivable management firm like Axim. We’re an outsourced AR team that knows how to get results without bullying your customers.
Instead, we take a customer service approach to get your invoices paid and keep you on the good list (and in the green) year after year. Contact us today to see how our outsource accounts receivable management can work for your company.