Common objectives of the customer account management process

A robust and effective AR management procedure can be the difference between declining capital and a thriving business. However, businesses that continue to operate their AR manually will encounter many obstacles that will negatively impact cash flow and customer satisfaction.

To understand the accounts receivable process and its common goals, you must first master the fundamentals of accounts receivable. In this article, we’ll define Accounts Receivable goals and objectives and offer tips on how to set Accounts Receivable objectives.

What is Accounts Receivable Management?

Customer account management is an integral part of any business organization. This dramatically affects customer relationships, cash flow, working capital, and your business bottom line.

Accounts Receivable (AR) are payments due to your business for services or products that have already been provided. The process to ensure that these payments are made accurately, on time, consistently and reliably is a proper accounts receivable process. A well-managed AR reduces overdue accounts and the time and effort required to manage them.

Outsourcing Accounts Receivable Services encompasses a variety of processes. It will include credit extension, customer relations, invoicing, monitoring and analysis of payment trends, collections and reconciliation of payments.

What are the common objectives of the customer account management process?

Accounts receivable can be a common source of stress for businesses, with late payments causing countless funding and cash flow issues for many businesses. SMART setting – Specific, measurable, achievable, relevant, and time-bound performance goals for accounts receivable services can help you optimize your process and reduce the time it takes for your customers to pay you. Here is the list of objectives of the customer account management process:

1. Incorporate a structured credit approval process

Establishing a credit approval system requires consultation with finance and accounting departments, as the decision to grant or deny credit to a vendor could affect your revenue. Determine the requirements for establishing a line of credit with your organization, including waiver and credit hold conditions. Allowing your customers to submit their claims through an automated system can reduce clerical errors and prevent fraud.

2. Define KPIs and objectives

Your organization’s initial accounts receivable performance focus should be centered around its objectives and KPIs. Ultimately, it’s hard to determine the extent of your billing issues without looking at the big picture. The most common metric in accounts receivable days debit has a significant impact on cash flow. Therefore, reducing the total number of days receivable should be one of your primary goals and objectives for the accounts receivable process.

There are, of course, many other metrics you need to monitor, such as the number of old debts, the number of follow-up calls made to customers, the percentage of debts canceled each month, the percentage of customers who pay late , and the number of reminders sent to customers. Pick the metrics that best suit your business needs and work to keep them as low as possible.

3. Institute the use of credit operations

The company may adopt the practice of providing credit policies to its customers. This credit can be extended for a predetermined period, and any default in payment is usually subject to a penalty. This credit facility practice requires that two parties agree to the terms and conditions of such credit transactions. Before agreeing to these conditions, the supplier of this facility must also verify the customer’s ability to make payments to avoid a loss of cash.

4. Reduce losses incurred due to bad debts

Locked money means insufficient funds to conduct day-to-day activities. No business would want to suffer losses of any kind. Inefficient receivables management would lead to bad debts, ultimately leading to losses. Accounts receivable management will allow you to keep a close eye on the payment schedule, enabling you to follow up with your accounts receivable regularly and maintain optimal cash levels.

5. Online customer billing

Online invoicing is the norm in today’s business world. its implementation should be one of your customer account optimization goals if you don’t already.

In terms of speed and ease, there is no comparison between online invoicing and sending paper invoices. The first is immediate, whereas snail mail is so named for a reason. Likewise, it is much more convenient and simple to invoice customers online. Creating and sending invoices is less hassle when you have everything in one place, and tracking payments is a breeze.

6. Collecting money

Although it may seem obvious, the customer must be charged if the money is to be collected. Therefore, invoices must be sent quickly and accurately. The receipt of your invoice is the first indicator of the effectiveness of your debt collection system for a company. If invoices arrive late and are inaccurate, your accounts receivable department will be perceived as inefficient and customers may exploit this perceived weakness to delay payment.

Additionally, if an invoice is incorrect, some customers may take the opportunity to assert that there is a dispute over the account and therefore suspend payment of all invoices until the dispute is resolved.

7. Accounting and invoicing

Invoicing supports the accounts receivable process in addition to credit approvals and data management. Here’s how to invoice professionally and efficiently.

Above all, you want your invoices to be accurate, so keep detailed records of the work, products and services you will be billed for. Also provide clear payment terms to avoid confusion. Include any terms agreed with the customer on the invoice to avoid misunderstandings, and make sure you follow those terms as well. Again, this demonstrates to your customers that you are trustworthy.

8. Give customers multiple payment options

The majority of businesses prefer to transact online, but some prefer to pay invoices in cash or by check. For example, some software allows customers to pay by credit or debit card, ACH bank draft, or mail. Using an invoicing platform that allows you to send invoices and accept multiple payment methods makes it easier for every customer to pay their invoices.

9. Sending reminder emails

When payment is due or overdue, you should send a well-written email to your customers reminding them to settle their debt. This is essential for maintaining good customer relationships and a stable revenue stream.

An automated payment solution makes it easy to optimize your email payment reminders. For example, with online apps, you can compose reminder emails, personalize them based on the recipient, and set up an automatic trigger to send them.

Thus, customers who are late in payment will automatically receive your reminder email without your intervention. Sending email reminders is essential, but it can be cumbersome and time-consuming. The described process optimization makes a huge difference.

10. Establish a Transparent Credit Approval System

Since you are lending money to your customers, one of the most effective goals and objectives of the accounts receivable management process is to establish a clear and concise credit approval policy. It is essential to clarify the specific conditions under which credit limits can be exceeded, if any, and what must happen for an account to be placed on hold.

To do this, the Accounts Receivable Services team should work closely with finance and sales to determine which policies are best suited for your current customer base. Additionally, you should regularly review your credit limits to ensure that your policy is still applicable. Finally, depending on the circumstances, you may need to modify your policy to better align it with changing business and economic conditions.

11. Develop a billing dispute resolution system

Almost all businesses handle disputed invoices, and establishing a procedure for resolving them can lead to happier customers and paid invoices. Before providing a product or service to the seller, informing them of the terms of the transaction allows them to ask questions or express concerns before receiving an invoice. Explain each element of the invoice and offer an alternative solution if a supplier disputes their invoice, such as a payment plan.

12. Streamline the billing process

When billing is not managed effectively, customer accounts often run into problems. Whether it’s incorrect customer information or a failure to send the invoice promptly, errors in your invoicing workflow can cause delays and prevent you from receiving payment. It’s also important to review when you send invoices, as many companies send invoices in batches, causing a cash flow bottleneck.

When considering the goals of your accounts receivable process, you should consider automating it whenever possible. By automating your process with an electronic invoicing system, you can reduce the risk of human error and ensure that invoices are issued as soon as the work is completed, increasing your cash flow and reducing administrative burdens on both sides.


The status of accounts receivable can reflect on the business as a whole. For example, if they are well organized, finances are healthy, customer relationships are thriving, and employees are happy. On the other hand, if they are messy, the opposite is true.

A good question is how you can determine the status of your accounts receivable; Achieving the goals discussed in this article is one way to determine if you are on the right track. Achieving them all will ensure that your accounts receivable services are optimized.