Building a well oiled Receivables process

A good parallel to look at is a sales process .

Most successful companies run their sales operations as a well oiled machine .

They use a funnel to describe the process of leads coming in which is converted to prospects which is then converted to sales and so on.
 

A company’s billing operations also needs to be thought of as a well oiled machine with new invoices generated every month entering through the top and getting paid at various parts of the funnel .

This is important especially if you are a business generating hundreds and thousands of invoices per month.

Just hiring more people to follow up may not be the most optimal way to get all your outstanding invoices paid on time. Enter the “Receivables funnel”

The Receivables funnel

The receivables funnel shows the various channels through which your business could get paid.

The various channels are then stacked on the basis of how hard a channel is to accept payments.

For eg: An invoice which is automatically debited using card on file is a channel that requires the least effort from your team Vs an invoice that requires more follow up and calls to get paid .

In an ideal world, All customers would pay through the channel that requires the least effort from your business to get paid. As you go down the funnel the payment follow up process becomes more manual and long drawn.