Any seasoned executive knows that staying on top of debt collection is critical. Letting accounts go past due and allowing invoices to go unpaid is counterproductive to the success of your property management business. Part of the problem is that many otherwise savvy business professionals fall victim to certain myths and mistruths surrounding accounts receivables. Let’s take a look at a few of these myths and the truth behind them so you can start turning things around ASAP.
My property management company doesn’t have a problem with accounts receivable
While this may potentially be true, it’s highly unlikely. The truth is, almost every company struggles with debt collection to some degree. You may be more on top of it than others, but chances are, you’ve got at least some past due accounts. And if you do, that means your cash flow isn’t as good as it could be. Analyzing your AR and developing KPI’s specific to your accounts receivable can help you stay on top of performance and provide insight into smaller problems so you can get a handle on them before they get out of control.
Accounts receivable is a breeze
Just mail out the invoices and record payments, right? Not necessarily. There’s a lot more involved in the process of debt collection than you may realize, particularly if you’re upper management and don’t deal with the day-to-day drudgery. There are a lot of steps to billing a customer, including account balancing, invoice creation and delivery, analyzing aging reports, sending out reminder letters and past due notices, calling customers, noting accounts, settling disputes and so much more. Make sure you are arming your AR team with the tools they need to do their jobs efficiently.
It’s not us, it’s them
Another big myth many property management executives fall for is the belief that the problem with receivables is on the customers, not the employees. The fact is, nearly half of all late payments are late not because of the customer’s unwillingness or inability to pay, but due to administrative errors. Keep in mind that your customers have many different vendors that they’re dealing with on a daily basis. If your AR team is making mistakes, it won’t be fast or easy for your busy customers to pay you, which means your cash flow will suffer. Make sure AR is property trained and routinely audited to ensure compliance and accuracy.
Timely and complete debt collection is absolutely critical to the ongoing success of your property management company. If you’re guilty of falling for one or more of the above myths, the good news is it’s never too late to turn things around. Apply the advice given and take advantage of the tools and technology that are available to you and you’ll begin to see positive, measurable changes in the right direction.