10.29.2021 | Posted by Erik
How to Avoid Payment Issues Due to Higher Employee Turnover
A record-breaking number of employees are leaving their jobs. From April to June 2021, 11.5 million people left their company. And according to the latest research, 55% of people are still planning to leave their current role.
This unprecedented workforce exodus has been dubbed “The Great Resignation,” and it’s something all businesses should be preparing for. Even as an outsourcing accounts receivable management firm, The Great Resignation is something we have on our minds. Here’s why.
If you don’t prepare, this transitional period can hurt your accounts receivables. It’s critical to make sure your internal and external processes don’t break down if someone from your company or your customer’s company leaves.
Here are some tips for keeping your AR process running smoothly during this time.
Internal AR Processes Checklist
Your internal processes refer to your in-house team. During this period of high employee turnover, you might lose some team members. That’s why it’s crucial to prepare your in-house accounts receivable process to weather any unexpected staff changes. There are some concrete steps you can take in advance, but the absolute most important thing to do when there is turnover in your AR department is to continue contacting customers regularly.
Here’s a quick checklist to help you cover all your bases:
- Make sure your AR process doesn’t live and die by a single employee. The process should be documented so new employees can easily follow it. You should be able to easily hand off the AR process to someone new if your current staff member suddenly leaves.
- Make sure customer communication doesn’t get stalled or delayed when a new employee comes on board. With clear documentation of your process, a new staff member can get up to speed quickly to ensure that there’s no lapse in contacting customers. Delaying past-due follow-ups can allow outstanding invoices to snowball, creating an even more difficult environment for a new AR employee to get things under control—but with a clear step-by-step process, they can jump on communications quickly.
- Document what to include on invoices for specific customers, and make sure every invoice contains the correct information.
- Document the standard invoicing process. It’s essential you know exactly how the process should work and how often to send invoices. Many companies now ask vendors to upload invoices to a portal or send via electronic data interchange (EDI). This should be clearly noted since not submitting in the proper way can lead to slower payments or possible deductions. This helps ensure that, if the person who manages the invoices leaves, you still know how to bill your customers properly.
- Document the payment follow-up process in an extremely detailed map. Much like the invoicing process, you should take time to understand and document your team’s follow-up steps to collect on past dues. A good place to start is to include:
- The number of days to contact the customer after an invoice is past due (we suggest between 7-10 days late)
- The number of days between subsequent follow-ups
- The contact method for follow-ups (phone vs. email). At Axim, we start with an email, send a second email 3 days later, and if there’s still no response, we then make a phone call 2 days after that
- Document the collection cadence. You need to know when accounts ordinarily get sent to collections and ensure it’s consistent even if you have a new employee in charge of the process.
If you’re already outsourcing accounts receivable management, you’ll still want to make sure to complete this checklist because preparing your internal processes for potential staffing disruptions is one of the best things you can do to protect your company’s AR process.
External AR Processes Checklist
Your external processes refer to your customer’s potential employee turnover. It’s worth noting that you should always take care of your internal processes first before worrying about your external processes. But, for the highest likelihood of success, it’s wise to prepare on both fronts.
- Reach out to each of your customers quarterly (at least) to make sure the contact(s) are still the same. You should also verify that your contact’s supervisor and upper management haven’t changed either since you may need that information for collections purposes later.
- Take time now to find out who the next person in line is for accounts payable if your contact leaves, and document that in the company file.
- Obtain contact information for multiple contacts in a company. If possible, try to get more than one contact for your accounts. This isn’t just good advice for AR. It’s also a great practice in general.
- Designate a consistent place or system to leave notes about your contacts (ideally, your AR or CRM system) in case someone leaves, either at your company or your customer’s company. The trail should be easy to follow if you or a new AR person needs to find the contacts in a company, the date of the last communication, and what it was about.
Taking these few steps will help make sure you have multiple points of contact for your customers and a central location to locate that information should your primary contact leave.
Prepare By Outsourcing Accounts Receivable Management
You might encounter some staff shakeups at your company or your customers’ companies, but, if you prepare now, your accounts receivable process is more likely to remain intact.
One way to prepare is to consider outsourcing accounts receivable management. That way, your internal team doesn’t have to worry about the AR process during transition periods.
As an accounts receivable outsourcing firm that focuses on helping you get paid without impacting your business reputation, we’d love to help.
Contact Axim today to see how our outsourcing accounts receivable management process can help you navigate AR during The Great Resignation.