Dispute management in accounts receivable - Disputes, Past Dues

Especially now, when almost every business is struggling to manage cashflow and perform more efficiently, while half or more of your folks are working from home, without the easy ability to ask questions or seek advice, it’s important to categorize your receivables into manageable, homogeneous categories that can be assigned to your team members best suited to collect them.

Disputes, Past Dues and the Need to Segregate Your Receivables.

Everyone’s situation is a bit different, but let me suggest three broad categories to consider and build upon:

  1. Current and recently past due transactions. Handle as you normally would. If you haven’t already implemented automatic past due reminders for your smaller accounts, consider doing this to relieve the increased burden on your collectors.

  2. Seriously past due transactions with accounts that have severe cashflow issues. It’s important not to let these customers feel completely overwhelmed and helpless, you can’t afford to have these folks just give up; likewise for the collectors assigned to them. Dealing with this initially takes a different skill set. Assign a senior collector or specialist who can jump in and help structure a payment plan on the overdue transactions that defers the debt and defines a realistic monthly payment that will settle the debt long term. Then allow the original collector to keep the account current on transactions going forward and monitor the monthly payment.

  3. Disputes. Disputes were often hard to collect before and are much more so now. Except for the most routine disputes, consider assigning them to a specialized team that has the knowledge, experience and ability to access the organizational resources needed to meaningfully and effectively address the issues. In the best of times, your typical collector can spend significantly more time, and be significantly less effective, than a seasoned dispute specialist. Understanding the issues, gathering the appropriate documentation and knowing how to play the “game” are vital skills to resolve many disputes effectively. When it makes sense, shield your collectors from this and let them focus on keeping routine transactions current.

AR dispute management software

Modern AR software should be easily configurable to help manage this. It should have the ability for disputes, or certain classes of disputes, to be filtered out of normal collections and automatically routed to the team members specializing. It should also have the ability to aggregate payment plan transactions in to single balance and avoid flooding your over 90.

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