3. Allocating insufficient resources for collecting outstanding receivables locally
It happens often that the resources that technology multinationals allocate to certain markets do not correspond to the growth and value of their accounts receivable. Clear manifestations of this incongruity are local subsidiaries being too short-staffed to carry out accounts receivable activities properly, local staff lacking motivations and training to recover debts, and pressing local accounts receivable problems being given low priority by headquarters. Such stringent local operations usually fail to produce the desired result. The repercussions could be widespread and felt throughout the entire organisation – from the local sales ledgers to the corporate balance sheet – if no adjustments are made.Your customers do not always tell you immediately why they delay their payments. It is imperative to learn the true motives behind the overdue invoices.
There are customers who delay payments on purpose to improve their cash flow. In this case, they will give you various plausible excuses. It is important to stay alert and spot these stalling tactics. If they say they have already paid, you should ask for proof of payment and details like the date and amount of the payment. If they say there are errors in the invoices, you should check if that is true and send amended copies if necessary.
The growth of sales in a market should be a yardstick for investment in its accounts receivable operations. It is one thing to provide high-growth markets with adequate financial and human resources for accounts receivable, it is another thing to grant them authority and accountability to make decisions under certain circumstances. This will allow local subsidiaries to add more value while being engaged and congruous with global accounts receivable management.