Getting Paid First
It's a classic struggle. As A/R professionals, how quickly our A/P compatriots pay our invoices is our measuring stick. To A/P, our invoice is just one of the thousands of invoices they must eventually pay. But since A/P has no urgency for any one invoice, what can we do to get them to pay us first? Are we simply at the mercy of the payables gods?
There are proven best practices for getting paid first.
Step 1: Leverage the 10/80/10 rule
Nothing will relegate you to the back of the line faster than a generic form letter. Yes, they’re easy to crank out and ensure you’re “communicating” with all your customers, but they are about as effective, without being as entertaining, as an 80s infomercial. If you want any chance of getting a desirable response, you need to start personalizing your outreach.
Before you think you don’t have the bandwidth to customize every collections email, remember the 10/80/10 rule. You don’t need to make the entire message unique to be effective. If you personalize the first ten percent, leverage a standard story for the middle eighty percent, and finish the last ten percent with additional tailored messaging, you can craft effective distinctive communications.
This approach will improve your ability to stand out from the crowd while still enabling you to maintain the volume of communications needed to hit your cash collections targets.
Step 2: Not every A/P person is the enemy
Do you wonder if that email you’re about to send will resonate? Curious to better understand how an A/P person decides which invoices to pay and which to not? Have you always wanted to know how many outreaches it will take before someone in A/P breaks down and pays attention to your invoice?
The solution to those mysteries is closer than you may imagine, and it is right across the pervertible, pre-pandemic hallway with your organization’s A/P team. You can stop wondering what the answer may be by talking to your A/P colleagues and getting the answer. Show them your email and solicit their direct feedback. Role-play your next call with them before picking up the phone. Share your collections sequence, and ask for their assessment and improvement recommendations. You’ve got a great resource on your team, leverage it to get paid faster.
Step 3: Invest in being a human
“Nothing personal, it's business.”
Yes, technically, that’s true, but underneath it all, we’re all human and looking to conduct business with people we like. If given a choice, is your favorite A/P professional going to pay you first because of the rapport you’ve built or someone who keeps rudely demanding they pay them now? You don’t need to be BFFs with everyone you’re trying to collect from, but investing the time to get to know them will go a long way.
It’s a good idea to keep track of things such as:
Their birthdays and/or their children’s birthdays
Their work anniversary
Their favorite sports teams
Their favorite hobby or summer travel plans
You don’t need to get super personal, but collections is about connections. You’d be surprised how far remembering a small antidote will go towards elevating you to the front of the payments line, and you might even make a new friend.
While it may seem that A/R is at the mercy of A/P’s whims, that is actually not the case. A/R can take proven steps to improve their ability to get paid first. These actionable steps will improve collections performance and eliminate the classic conflict between A/R and A/P. Lastly, as an A/R professional, you will no longer be hoping for the payables gods' benevolence.
If your organization is ready to get paid first with AR automation, contact Tesorio today.