Happy Sunday!
This week we are still on the topic of receivables. Your team (or you) that collects cash for your business plays a very important part in the cash flow process. Failure to train these team members can be a big setback for your business and put your business in a tough spot if cash isn’t managed properly.
This is where making sure your credit/collections team is performing at the highest standard. There’s a process to follow from setting up a customer all the way to collecting that hard earned cash for your business.
Here’s a couple of success stories related to how I’ve led global organizations upward when it comes to AR management. Whether you are making millions or thousands monthly, I can help!
- $100M business (net income) was carrying 18-20% past due on average each month. That’s a lot of cash on the table! Plus, when you don’t collect on time you can plan to lose about 1-2% of your profit margins built in because you are basically financing that customer’s debt at that point (email me if you want this explained further!). So, we really put focus towards the overall receivables process and made quite a few adjustments on approach. I am not a fan of the “we’ve always done it this way” mentality as that approach put them in this position. Time for change. Fast forward 3 months and after a one financial quarter we were trending below 10%. BOOM! Fast forward another financial quarter and the business was carrying around 6% on average (still are from what I know) and that is primarily rollover timing of when invoices become due.
- $300M business (net income) was carrying almost 30% past due on average each month. Talk about an issue….Similar to the above we implemented changes to the collections process and how they were onboarding new customers (think financially healthy customers here and make sure your sales team understands what that means). These changes cannot happen instantly, though we’d like that. We worked this angle for roughly a 6 month period like the above and brought this business down to 8% on average with the bulk being timing related vs true past due or dispute issues. By the 1 year mark, this was down to 5% on average monthly and maintained. This business is also still carrying around the same past due each month vs 30%. Do you understand the cash impact that has and how it helps this business each month by freeing up 25% of past dues?! HUGE!!!!!
Want to scale your receivables to something like this or better? It can be done and I’d love to be apart of that and show you/your team how to approach this situation! Every business and industry is different and the approach I take will be one that puts you as a leader in your industry setting the tone for others to follow.
Email me at brad@guernseyconsulting.com today to learn more and remember, we are offering 20% off through 7/5/2024! Get your team thinking the right way and collecting the right way now vs waiting until in a tight spot.
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Let’s jump into the meat and potatoes of what I wanted to talk with you about for the day!
As businesses strive for financial stability and growth, the role of AR teams becomes increasingly crucial. Ensuring your AR team is well-trained and continuously developing their skills can significantly impact cash collection outcomes and overall financial health. Let’s delve into why ongoing training and professional development are essential for AR teams and explore effective training programs, certifications, and skills that can help improve their performance. 🌟
The Importance of Ongoing Training for AR Teams 📈
Accounts Receivable teams are at the forefront of managing a company’s cash flow. Their efficiency in collecting payments directly influences the business’s liquidity and financial stability. Ongoing training ensures that AR professionals stay updated with the latest industry practices, technological advancements, and regulatory changes. By investing in continuous learning, businesses can enhance their AR team’s performance, leading to quicker collections, reduced bad debts, and improved customer relations.
Regular training boosts employee morale and engagement. When team members feel valued and see opportunities for growth, they are more likely to be motivated and committed to their roles. This positive attitude translates into better job performance and a proactive approach to resolving collection issues. A well-trained AR team is an asset to any organization, driving financial success and contributing to long-term growth.
Effective Training Programs for AR Teams 📚
Implementing structured and comprehensive training programs is crucial for developing a highly skilled AR team. These programs should cover various aspects of accounts receivable management, from basic principles to advanced collection strategies. An effective training program typically includes the following components to help your team.
- Fundamentals of Accounts Receivable: This section covers the basics of AR, including understanding invoices, payment terms, credit policies, and the importance of timely collections. It provides a solid foundation for new team members and reinforces essential concepts for experienced professionals.
- Advanced Collection Techniques: Training on advanced techniques such as negotiation skills, dispute resolution, and customer relationship management can significantly enhance the team’s ability to collect overdue payments. These skills are crucial for handling difficult situations and maintaining positive customer relationships. Always, always, ALWAYS, maintain a professional position when it comes to interacting with customers. Especially those AR Specialists who are doing the day to day contacting.
- Technology and Automation: With the increasing use of technology in AR processes, training on the latest software and automation tools is essential. This includes learning how to use AR management systems, payment portals, and data analytics tools to streamline collections and improve efficiency.
- Regulatory Compliance: Ensuring compliance with relevant regulations, such as the Fair Debt Collection Practices Act (FDCPA), is critical for AR teams. Training on regulatory requirements and best practices helps avoid legal issues and maintains the company’s reputation.
- Customer Communication: Effective communication is key to successful collections. Training programs should include modules on developing strong communication skills, handling difficult conversations, and using customer-centric approaches to foster positive interactions.
Certifications for AR Professionals 🎓
Certifications add credibility to an AR professional’s expertise and demonstrate their commitment to continuous improvement. Several certifications can benefit AR teams, enhancing their skills and knowledge. I don’t necessarily think your team needs to have these certifications, but if you are looking to offer continued learning these may be options to consider for those in your credit/collection positions.
- Certified Credit and Risk Analyst (CCRA): Offered by the National Association of Credit Management (NACM), this certification focuses on credit risk assessment, financial statement analysis, and risk management. It equips AR professionals with the skills needed to evaluate customer creditworthiness effectively.
- Certified Credit Executive (CCE): Also provided by NACM, the CCE certification is designed for experienced credit professionals. It covers advanced topics such as international credit, legal issues in credit management, and strategic planning. This certification is ideal for those looking to take on leadership roles within the AR team.
- Certified Receivables Compliance Professional (CRCP): Offered by the Receivables Management Association International (RMAI), this certification focuses on compliance with industry standards and regulations. It ensures AR professionals are well-versed in ethical collection practices and regulatory requirements.
- Certified Professional Collector (CPC): Provided by the ACA International, the CPC certification covers essential skills for successful collections, including communication techniques, negotiation strategies, and legal compliance. This certification is valuable for all levels of AR professionals.
- Certified Credit and Collection Manager (CCCM): Offered by the American Society of Credit and Collection Professionals (ASCCP), the CCCM certification focuses on management and leadership skills. It prepares AR professionals for supervisory roles and helps them develop strategies for improving collection performance.
Key Skills for AR Professionals 🔑
To excel in their roles, AR professionals need a diverse set of skills. Ongoing training and development should focus on enhancing these key competencies:
- Analytical Skills: AR professionals must analyze customer data, payment histories, and financial statements to identify potential risks and opportunities. Strong analytical skills enable them to make informed decisions and develop effective collection strategies.
- Communication Skills: Effective communication is crucial for resolving disputes, negotiating payment plans, and maintaining positive customer relationships. Training on active listening, empathy, and assertiveness can significantly improve communication outcomes.
- Problem-Solving Skills: AR professionals often encounter complex situations requiring quick and effective solutions. Training on problem-solving techniques helps them handle disputes, address payment delays, and find mutually beneficial resolutions.
- Technical Proficiency: Familiarity with AR management software, automation tools, and data analytics platforms is essential for modern AR professionals. Ongoing training ensures they can leverage technology to streamline processes and improve efficiency.
- Time Management: Managing multiple accounts and deadlines requires excellent time management skills. Training on prioritization, organization, and efficiency can help AR professionals stay on top of their tasks and meet their collection targets.
The Impact of Training on Cash Collection Outcomes 💸
Investing in the training and development of AR teams has a direct impact on cash collection outcomes. Well-trained professionals are better equipped to handle the challenges of receivables management, leading to quicker collections and reduced bad debts. They can effectively communicate with customers, resolve disputes, and negotiate payment plans, ensuring that payments are received on time.
Ongoing training keeps AR professionals updated on the latest industry trends and best practices. This knowledge allows them to implement innovative strategies and leverage technology to improve collection efficiency. By continuously developing their skills, AR teams can adapt to changing business environments and contribute to the company’s financial success.
The importance of ongoing training and professional development for AR teams cannot be overstated. By implementing effective training programs, obtaining relevant certifications, and enhancing key skills, businesses can ensure their AR teams are well-equipped to manage receivables efficiently. This investment in training leads to improved cash collection outcomes, reduced bad debts, and a stronger financial position for the company.
If you need assistance with training and developing your AR team, contact Brad at Guernsey Consulting LLC by emailing brad@guernseyconsulting.com or visit www.guernseyconsulting.com. You can also schedule a meeting directly through Calendly. Let’s work together to enhance your AR team’s performance and ensure your business’s financial success! 🚀💼
