Interesting one since I a) worked at a startup in this area long ago (they ran out of money..for reasons see below) and b) I now run a company and have found customers dislike for paying on time to be a significant irritation.
However, unless this proposed "AR Service" has a way to get a horse's head into the bed of the late payer's CFO, how are they going to achieve anything? In my experience simply asking for payment doesn't achieve much. They're paying late because they want to and unless you have a way to force them to pay (e.g. stop providing your services to them) and that seems hard to outsource.
Agreed, without the ability to exert pressure, getting people to pay by asking is not meaningful. Otherwise, it's solved with a script that repeatedly emails escalating copy.
I can only hope one day, horse heads will be available via Amazon Prime drone delivery, accessible through an API.
(Disclosure: I’m the co-founder & CEO of Tesorio, YC S15)
Awesome discussion. Agreed that this is very tough to just outsource, paying you for your services is the final step in the customer experience. CFOs and even sales or customer success teams want to treat customers very carefully in a personalized way.
Sending out automated reminder emails is called ‘dunning’ and most accounting tools will do this for you automatically. But as people mentioned, if you can’t really exert pressure, how do you get someone to pay? It’s similar to sending spammy sales emails vs. personalized messages that will get someone’s attention. Also, most big companies will just ignore your late fees.
We’ve found that the best teams at this manage their relationships and they know every last detail about the person who actually cuts the check at their client. We’re actually currently tackling collections from another perspective - we basically built a product that combines the best parts of sales CRM and customer engagement tools.
The way to get the CFOs to buy though is to help them with their cash forecasts. A good collections tool is an A/B testing machine that lets you capture information from the folks doing the collections so the CFO’s team can create more accurate forecasts.
Our website showcases our active products (Forecasting, Forex, & Analytics), but we’re currently in Beta with the Collections tool. Would love to show it to you and get your feedback. My email: carlos[at]tesorio.com
There are definitely outsourced debt collectors and bailiffs who will recover debts for you, up to and including getting court orders to seize property.
Strangely this doesn't overlap with the "happy path" of normal AR processing.
Wouldn't a simple solution be to add high interest to unpaid invoices over a certain time? I've seen invoices with this clause. Of course, you can selectively enforce.
It turns out that doesn't solve the problem at all in my experience. This is because any interest, even if paid, doesn't come close to compensating the vendor for the pain of being paid late. And it doesn't seem to act as a deterrent since the kind of CFO who tells their AP staff to late pay doesn't give a crap about your interest charges.
Interesting one since I a) worked at a startup in this area long ago (they ran out of money..for reasons see below) and b) I now run a company and have found customers dislike for paying on time to be a significant irritation.
However, unless this proposed "AR Service" has a way to get a horse's head into the bed of the late payer's CFO, how are they going to achieve anything? In my experience simply asking for payment doesn't achieve much. They're paying late because they want to and unless you have a way to force them to pay (e.g. stop providing your services to them) and that seems hard to outsource.