The human element in accounts receivable management

As finance races toward a future of automation, we’d be wise to remember that accounts receivable (AR) management isn’t just about technology, it’s also about people. Because when it comes to AR management — especially managed AR — the human element is just as essential, if not more so. 

Sure, technology can track invoices and automate follow-ups, but it can’t build trust, handle delicate conversations with clients, or understand the nuances of customer relationships. And when it comes to getting paid on time, those things matter. 

In the following sections, we’ll break down how a human-centered approach in AR management isn’t just a “nice-to-have” but a fundamental part of a strong, resilient financial strategy. You’ll find the data, insights, and even a spot for a real-world example to underscore why sometimes, there’s no replacement for a personal touch. 

The importance of relationships in AR management

Effective AR management does more than just maintain a healthy cash flow. It sets the tone for how a company is perceived by its clients. Customers are more than just transaction IDs on a ledger — they’re partners who need to trust you. A well-handled collections process can project professionalism, inspire trust, and build respect between you and your clients. Anecdotal research suggests that high trust may even get you paid faster. 

Now, what’s the difference between a “collections process” that just works and one that truly connects? The answer is all about proactive communication. Short, regular follow-ups prevent overdue invoices, help manage credit terms and ensure that customers feel valued rather than hounded. If you keep an open line of communication and approach clients with empathy, you’re not only protecting your cash flow but also cementing a partnership. 

Here’s what effective customer relationships bring to AR: 

• Enhanced trust and professionalism: Building rapport with clients helps them see you as an organized, trustworthy partner. 

• Reduction in late payments: When clients feel respected, they’re more likely to prioritize your invoices. 

• Improved financial reporting: Strong relationships help smooth over any discrepancies, making reporting more accurate and compliant. 

• Stakeholder confidence: A reliable AR department reassures stakeholders that you’re managing finances effectively. 

With proactive engagement, a company can use AR to protect its bottom line, even during economic turbulence. A strong customer relationship is truly one of the most cost-effective ways to ensure timely payments. 

Understanding customer dynamics

AR management isn’t just about records and transactions; it’s about understanding customer behavior. When extending credit, evaluating each customer’s financial stability, payment history, and general willingness to pay can prevent headaches down the line. Getting a solid grasp on customer dynamics also means recognizing how different clients prefer to pay. 

Offering varied payment options — such as credit cards, debit cards, or digital transfers — can eliminate excuses and encourage prompt payments. It’s a simple but effective way to meet customers where they are and avoid missed payments.  

As an aside, McKinsey’s 2023 Global Payments Report underscores the significant impact of payment diversification, especially in terms of driving digital transactions and cash displacement. The report shows how embracing digital payment methods like instant payments and digital wallets has improved financial performance across sectors by reducing transaction costs and accelerating cash flows. Understanding customer behavior obviously has a bottom-line impact. 

Consider these customer engagement strategies: 

• Communicate clearly: Set expectations upfront with billing procedures and payment terms. 

• Proactive follow-ups: Reach out to customers who are overdue in a personalized way. Show them you understand their specific situation. 

• Use AI for prioritization: AI-driven tools can help segment customers based on behavior, so you know where to focus your efforts. 

The right combination of these strategies can significantly improve cash flow and lead to faster collections.  

Building trust and rapport with clients

Customers who trust you are customers who pay you. That trust is built not only on your AR processes but also on the way you communicate, especially during tough times. When payments are late, it’s easy to let frustration creep in, but taking a calm, professional approach can go a long way. Consistent, courteous communication shows your clients that you’re not just looking out for your own interests but also for theirs. 

A crucial part of this is maintaining a positive tone, even when there’s a missed payment. By reviewing receivable aging reports and taking swift action on overdue accounts, you can convey that your company values its clients and is committed to fair and efficient processes. This proactive approach will not only resolve payment issues more quickly but also reinforce client confidence in their business dealings with you. 

Empathizing with customer needs and taking a personalized approach in collections can significantly reduce the average collection period and boost your financial health. When clients see you as an ally rather than a bill collector, you’re well on your way to a more reliable AR system. 

Effective communication strategies

Solid AR management relies on communication — both within your team and with clients. Open, regular dialogue reveals clients’ fiscal behaviors and capacities, which can help tailor your collection strategies. 

The impetus is real. According to PwC, there’s been a 6.6% increase in Days Sales Outstanding (DSO) over the past five years. Relieving this working capital pressure necessitates building a more collaborative and mutually beneficial relationship between clients and suppliers, as well as breaking down internal organizational silos. 

By establishing two-way channels with clients, you’re laying the foundation for trust that can ultimately translate into more prompt payments. And if issues arise? An effective post-sales support team that engages quickly can minimize collection challenges tied to customer dissatisfaction. 

To communicate effectively in AR: 

• Keep interactions professional and empathetic: When clients are late on payments, your response should be understanding yet firm. 

• Monitor overdue accounts and follow-up frequently: Regular check-ins remind customers of their obligations while keeping things friendly. 

• Listen carefully to customer feedback: If a client has an issue with an invoice, let them explain—understanding their perspective can help you avoid similar issues in the future. 

These strategies not only improve cash flow but also contribute to the overall stability of your AR processes. 

Team collaboration within AR

Accounts Receivable doesn’t operate in a silo. When teams work together — especially AR with departments like Sales, Customer Success, and even AP — the results can be transformative. Sales teams understand the client, Customer Success knows their pain points, and AP brings a wealth of insight on payment processing. By pooling this knowledge, AR management teams can craft more effective payment plans, prevent disputes, and solve issues faster. 

Regular interdepartmental meetings help identify process bottlenecks and create strategies for managing large accounts. Even small collaborative efforts can result in efficiencies that collectively help reduce overdue accounts. 

A collaborative approach also allows for a smoother integration of automated tools. With different teams aligned, technology becomes a supportive tool rather than a disruptor, creating a streamlined AR process that reduces manual effort and improves efficiency. 

The impact of human insight on AR efficiency

Let’s be real — automation is great, but people still matter in a tech-driven world. Nothing can replace the value of human insight. In fact, some select manual AR management processes, while sometimes slower, are far more effective at building relationships that lead to timely payments. 

However, the downside to relying solely on human processes is that, according to Aberdeen Group, manual accounts receivable departments can spend up to 67% more time on collections than their automated counterparts. That’s why the best approach blends human judgment with automation. Automating repetitive tasks frees up your team to focus on relationship-building, which, in turn, improves AR management performance. 

The synergy of human and technological elements creates an overall more agile AR system that can adapt to complex client needs. By letting automation handle the basics, your team can focus on the strategic work of growing relationships and maintaining financial stability. 

Managed AR — optimizing the people/technology equation

At the other end of the automation-meets-human spectrum lies Managed accounts receivable (Managed AR). This service offering takes the burden of invoice management and collections off your plate, allowing companies to focus on core activities while experts handle everything from customer communication to payment processing.  

With Corcentric’s Managed AR service, you gain more than just a streamlined AR management process — you tap into a comprehensive solution that blends cutting-edge technology with experienced AR professionals. This advanced Managed AR platform not only automates tedious tasks but also integrates advanced analytics and personalized customer outreach, significantly reducing DSO (Days Sales Outstanding) and improving cash flow.  

Unique to Corcentric is its ability to customize workflows tailored to your business needs, along with an unparalleled level of visibility into your AR performance. This combination of human expertise and technological precision helps ensure your receivables are managed efficiently, improving the overall financial health of your organization in ways that no mere automation alone could ever do. 

Conclusion: Integrating technology with the human element

AR management today isn’t just about choosing between people or technology — it’s about finding the right balance. Automated solutions can handle invoice tracking and payment processing, giving your team the time to engage with clients on a personal level. Empathy and understanding go a long way in collections, and when combined with tech that eliminates repetitive tasks, you’ve got a winning formula. 

By adopting this balanced approach, companies can create a more reliable AR system that not only shortens the average collection period but also builds stronger customer relationships. So, while technology may pave the way, it’s the human element that sustains the journey. 

In today’s landscape, the future of AR is bright — but only if we remember that, sometimes, a little humanity can do what automation never will.