Setting Goals for Success in the Accounts Receivable Department

​A company's financial health depends on how well it manages incoming payments. Late or missed payments create cash flow problems, making it harder to cover expenses and invest in growth. 

82% of small businesses fail due to cash flow problems. To avoid these issues, companies need clear accounts receivable goals that improve collection processes, reduce outstanding invoices, and maintain strong customer relationships.​

What steps can businesses take to stay on top of payments? From faster invoicing to better credit policies, the right approach can keep revenue flowing and prevent overdue accounts from piling up. This guide will cover essential goals for the accounts receivable department and practical ways to achieve them.

What is Accounts Receivable?

Accounts receivable (AR) refers to the money a business owes its customers for goods or services delivered but not yet paid for. These unpaid invoices are recorded as assets on the company’s balance sheet because they represent future income.

For example, if a company provides a service on credit and issues an invoice with a 30-day payment term, that amount is considered accounts receivable until the customer pays. Businesses rely on AR to maintain cash flow, cover expenses, and plan for growth.

Managing accounts receivable effectively means following up on unpaid invoices, setting clear payment terms, and ensuring customers pay on time. 

Also Read: Accounts Receivable Management and Cash Flow Practices

What Are Accounts Receivable Goals?

Accounts receivable goals are specific targets businesses set to ensure they receive payments on time and maintain a steady cash flow. Without clear objectives, unpaid invoices can pile up, leading to financial strain and operational challenges.

These goals mainly aim to reduce payment delays, improve collection rates, and create a structured process for handling outstanding invoices. Some common objectives include:

• Reducing the average time it takes to collect payments (Days Sales Outstanding or DSO)
• Ensuring invoices are sent out without delays
• Keeping customer payment records accurate and up-to-date
• Minimizing bad debt by improving credit policies

Businesses can avoid cash flow disruptions and strengthen customer relationships by focusing on these key areas. Now, let’s explore specific goals that can help achieve these objectives.

Also Read: Best Practices in Accounts Receivable Management

Common Goals of Accounts Receivable

Without structured processes, unpaid invoices can pile up, leading to financial strain. Below are key goals that can improve collections and minimize financial risk.

1. Keep Customer Contact Information Updated

Outdated contact details are one of the most common reasons for delayed payments. If an invoice never reaches the right person, it will not get paid on time. A global research study by Experian, which surveyed 1,000 executives, found that nearly 30% of customer data is inaccurate. Businesses often send invoices and payment reminders to incorrect addresses, leading to missed payments and delayed collections.

To prevent this, verify customer contact details at every transaction. Ask for multiple points of contact, such as a primary and secondary email, to ensure invoices and payment reminders reach the right recipient. 

Pro Tip: A simple habit of confirming details upfront can prevent missed payments and reduce the need for constant follow-ups, keeping cash flow steady.

2. Send the Invoice as Soon as Possible

Delays in sending invoices can lead to delays in receiving payments. The longer a business waits to bill a customer, the more likely the payment will be postponed or forgotten. In recent years, online billing systems have made it easier and faster to send invoices, reducing administrative workload and improving cash flow.

According to industry research, on average, 11% of customers never receive their invoices, which leads to missed payments and unnecessary delays. Establishing a scheduled invoicing process ensures that invoices are sent on time and payments are prioritized.

3. Use Email Reminders to Reduce Late Payments

Many late payments happen because customers forget due dates. A simple reminder can make all the difference. Even if a customer prefers paper billing, having their email on file allows businesses to follow up on unpaid invoices quickly.

When collecting contact details, it is important to ask for an email along with a phone number. Automated reminders can notify customers before a due date and follow up if a payment is missed.

South East Client Services Inc. provides automated reminders through email, SMS, and phone calls to ensure customers receive timely payment notices. This multi-channel approach increases response rates and helps businesses maintain a steady cash flow.

4. Automate the Billing Process

Manual invoicing slows down collections and increases errors. Many businesses still rely on data entry, with 86% of small and medium-sized companies manually processing invoices. This not only wastes time but also leads to mistakes that delay payments.

A single invoice takes an average of 12 minutes to process when done manually. When multiplied across hundreds of invoices, this adds up to hours of lost productivity. Automation eliminates these delays by generating invoices instantly and allowing customers to pay directly from the invoice.

5. Give Customers Multiple Payment Options

Making it easy for customers to pay is essential for on-time payments. Limited payment methods create unnecessary obstacles, leading to overdue invoices and cash flow problems. Providing multiple payment options removes barriers and encourages prompt payments.

Third-party debt collection agencies like South East Client Services Inc. (SECS) offer flexible payment solutions to help customers meet different financial needs. Customers can make a one-time payment to settle their balance immediately or set up a customizable payment plan to pay over time.

Depending on the account, SECS supports several payment methods, including:

• Visa and MasterCard credit or debit cards 
• Bank transfers 
• Mailed checks, money orders, or cashier’s checks 

6. Bill Customers Electronically

Sending invoices online makes the accounts receivable process faster and more reliable. Electronic billing reduces the chances of lost invoices, prevents delays caused by mailing issues, and simplifies record-keeping. It also saves time for accounts receivable teams by eliminating the need to sort, enter, and file paper invoices manually.

Despite the advantages, only a little over half (52%) of all invoices are received electronically, while the rest require manual processing. This adds unnecessary steps, increasing the risk of errors and delays. Businesses transitioning to electronic billing can speed up collections, improve efficiency, and reduce administrative costs.

Pro Tip: Choose an electronic billing system with automatic payment reminders and digital tracking.

Conclusion

Setting clear accounts receivable goals helps businesses maintain steady cash flow and reduce overdue payments. Using automation, multiple payment options, and digital invoicing improves efficiency while making it easier for customers to pay on time. A proactive approach ensures smoother collections and stronger financial stability.

​South East Client Services Inc. (SECS) offers creditors and debt buyers a trusted partnership for managing accounts receivable, from delinquency to pre-legal collections. With over 30 years of collective industry experience, SECS is committed to exceeding client expectations by providing effective and ethical collection strategies that drive success.

For personalized support, their customer service team is available at (888) 662-2897.