While this question will put off sales reps, collections teams may be cheering in their seats. If a sales representative works hard to land the ideal client but the invoice goes unpaid beyond the due date, who should be responsible for connecting with that client? Is a sale really complete if the invoice isn't paid? Do you have a solid process for who follows up and when it becomes necessary for your organization to move the account to collections?
Should sales representatives be responsible for collecting on past due invoices?
Accounts Receivable vs Sales Responsibilities
Let's first examine the responsibilities throughout the process of landing and onboarding a new client. In general, A/R can be involved in the sales process by examining the business's credit report, setting credit limits and payment terms:
Sales Reps: Cold-calling, qualifying, nurturing, building the business relationship, getting the contract signed.
Accounts Receivables: Setting payment terms, determining credit limits, invoicing per the contract.
Once the invoice becomes due or past-due, accounts receivable will follow a first-party collections process or A/R collections policy to begin contacting the client. This policy will define the responsibilities and tasks related to collecting receivables, including moving the account to a separate collections department before it is escalated to a third-party collections agency.
Relationship and Communication
There's no question that creating a trusted partnership or sales relationship is a long-term process for B2B sales. Sales representatives are at the onset of the business relationship, interacting and collaborating with the client initially. This is where expectations are set as well, including how much the client will pay, when, and how. (A best practice is to include this information within the contract with the assistance of a credit manager.) Because of this, sales may be concerned about damaging their upselling chances by getting involved with collecting on invoices.
Accounts receivable can also build strong relationships with established clients through regular communication and correspondence with the client's accounts payable department. This entails invoicing at regular intervals, following up on the invoices before they're due as payment reminders, and setting expectations for when payment is due. However, if there are any outstanding disputes regarding the early payments or challenges to the initial contract terms, the sales team can get involved to help resolve them.
When sales reps are helpful to the collections process, the account can often be recovered and the invoice paid.
Work Together to Secure New Business
If sales and accounts receivable can show a united front, from building out contract terms to collections, the business relationship can thrive. The new client will understand what's expected and how your business will work together to resolve their challenges and concerns. By making attempts to resolve the past due invoice early, your business is more likely to collect the full amount that's owed.
When the invoice is over 45-60 days late or if it appears unresolvable, there is an opportunity to collect and still protect your brand and business relationship. Enterprise Recovery offers Brand Protection when collecting receivables. We understand that solid business relationships are important and we do our best to honor that. Let us know if we can help with accounts receivable or debt collections today.