We’ve been talking with both AR experts and sales teams to find out who they think is in charge of collecting late customer payments. The consensus? It’s both.
One overarching theme we’ve noticed is that sales and AR are frustrated by the collection process, and no one enjoys pestering customers to pay an overdue invoice. This doesn’t negate the fact that money still has to be collected and the uncomfortable job of hounding customers still has to be done by someone.
Here’s a scenario you typically see in most companies:
- Customer fails to pay invoice on time.
- Accounts Receivable follows up with an email or two before hopping on the phone to try and reach the customer.
- After three failed attempts, the sales person gets roped in, but under protest. Sales begrudgingly calls the customer to see if they can make any progress, only for the ball to end up back in AR’s court once they get tired of trying.
And so the collections death cycle continues…
The question remains: who’s job is it to manage the customer relationship and collect payment? Sales or AR?
The short answer is both.
The technical and transactional side of the role belongs to the Accounts Receivable team. They offer back office support to help assist and declutter the sales role. In most cases, those preliminary reminders to a customer for late payment are successful and the invoice gets paid a few days late. No follow up is necessary after this point and everyone can move on with their lives.
In the more rare instance when a customer refuses to pay for some unbeknownst reason, the sales team should volunteer to step in.
The sales team has to understand that the sales process doesn’t end when the invoice is issued, but rather when the money is collected.
This means that stepping in to help the AR team successfully track down a customer’s payment isn’t an annoying chore, it’s a key part of their job. Similar to the offensive and defensive strategies in football, one team is in place to handle the incoming plays while the other is ready to go steal the ball back.
Sales and AR don’t have to be workplace enemies. They should work together to help the company as a whole win in every way possible.
In the end, each company should have clearly defined roles with obvious expectations for each team member. Frustration takes root in the ambiguity where no one wants to take responsibility for the less glamorous parts of running a business. But it has to be done, so make it clear what the rules of engagement are and everyone should get a long just fine.
If you work in sales or Accounts Receivable and have additional thoughts to share, we want to hear from you! Send an email to [email protected] if you’d like to share your feedback with us.