Why cross functional engagement is crucial to tackle AR?

I remember the first time I was given the responsibility of managing accounts receivable for my organization. Being someone who admires people who put a sizeable amount of passion on any responsibility that is entrusted to them, I wasted no time in searching for the best weapons that I could add to my armory for attacking AR. I soon had the aging analysis reports further spliced into business division and sales executive reports. My honest intention was to raise the sensitivities on the growing volume of unpaid bills and spur everyone, especially the sales team to diligently pursue customers for collections. While AR was getting helped, I was oblivious to the growing displeasure among some of my colleagues in the sales and customer interface teams. The primary factor that creates tension between cross functional teams, when dealing with receivables is the view on customer relationship. For the AR team, a customer is a customer only when he makes the full payment towards goods or services received. Anyone else does not deserve recognition as a customer and must be watched carefully and must even be cut off from the list if a certain threshold is reached. Others however, will refuse to take this apparently penny wise and pound foolish approach. Receivables need to be collected, of course, but not by damaging or closing relationships. One referral from a customer with an outstanding of hundred dollars can be a thousand in worth. Pump the topline, and the rest of the lines, including the bottom, will follow. If only the number crunchers and the bean counters could get it into their heads! There is no arguing the merit of these points.

• Collecting receivables on time is very important for the business
• Since customer relationships are also equally important, receivables must be collected without damaging relationships in any way
• As sales gallops forward, a rise in receivables is only to be expected

Organizations stand to benefit a great deal more if the opposing energies in the cross functional teams can be aligned under a common goal that drives the greater interest of the organization. In the context of Accounts Receivables management, it will mean faster collections with better customer relationships. This can be achieved only by a planned cross-functional engagement. Based on the type of industry, and business operations, various cross functional initiatives can be undertaken.

4 ways in which the sales team and the AR team can join forces

Listed below are some of the initiatives we tried out with good results, for our clients in the seafood industry, who have outsourced their Accounts Receivables management to our offshore team. In this industry the sales team not only acquires new customers, but also maintains and grows relationships with existing ones.

• Cross functional review of AR The sales team felt that our diligent follow-up with customers was being perceived as a nuisance. So, we decided to invite the sales team too to sit with us on a fortnightly review of customer accounts. These meetings brought a much needed objective assessment on the health of various customer accounts.
• The Sales team brought to the table their insights of customer preferences and behavior. This was very useful for the AR team that followed up with these customers to persuade closure of outstanding receivables.
• Understand information reports together Joint reviews were very helpful for putting together important information Data does not lie and the joint exercise helped to eradicate some of the misconceptions on each others' intentions. Soon, a spirit of teamwork began to evolve. The silos were being pulled down.
• Joint follow-up As the AR team shared their strategies for follow-up, the usefulness of the sales team's participation in persuading the customers became all too evident. This was welcomed wholeheartedly.
• Facing the customer as one team, one organization I will rate this as the clincher. When silos prevailed, the customers who are annoyed with being reminded for payments find some comfort in the friendly salesman, who inadvertently lends his ears and sympathies. A salesman remembered to ask "By the way, did my colleague update you on the status of payments due..." With the strengthening of cross-functional bonds, the customer faced one organization that cared about customer relationships, but was diligent about a win-win as well.

The result? Strong relationships and great AR management!