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Navigating the Tug of War: Collaborative AR in Sales and Finance Collections

Navigating the Tug of War: Collaborative AR in Sales and Finance Collections

Picture this: You’re an early-stage company and are slowly gaining traction. You have a steady inflow of customers, but it’s not too overwhelming. At least not yet, anyway. You have a lot of people involved in the collections process, including sales and CSM since you don’t have a dedicated finance or billing team or defined processes.

Now, cut to a few months or years down the line. The number of invoices is higher and your team scales in parallel. The stakeholders that were previously involved in the collections process aren’t anymore because they have set OKRs or KRAs.

There’s now a dedicated finance, AR, or billing department in place, meaning they’re the only stakeholders responsible for collections. Problem solved, right? While seemingly so, it is nothing but the beginning of a larger challenge that most fast-growing companies face.

The Tug of War Between Sales and Finance

It’s not uncommon for the sales and finance departments in companies to be dysfunctional. When it comes to collections, it leads to delays, strains customer relationships, and gives rise to greater financial challenges. Aiming to address and overcome the collections dysfunction that arises between sales and finance teams can help in better collaboration and drives efficient results. Afterall, what good’s a sale if collections aren’t done on time, right?

So, what’s the problem anyway?

Currently, the collections process in fast-growing tech companies happens in a disjointed manner.

This is what it looks like:

While this may seem simple, there are lots of intricate moving parts involved. In most cases, teams may not have the context or visibility to follow up with customers. For general customers, the process works fine. But they have no clue when it comes to trickier ones. If the finance team is conducting follow-ups, the sales team is a good source to get information. But due to lack of time, they may not provide the information they need.

To address these issues, some companies make salespeople accountable in the collections process by making it a part of their commissions. But this causes further problems. Salespeople have the same challenge as the finance teams.

So, as you can see, it creates a loop.  

Put simply:

  • They’ll not be able to effectively prioritize accounts
  • They could each follow up with the same customer twice or more
  • There could be multiple meetings to touch base on the progress
  • And there could be frequent internal escalations and finger-pointing

Regardless of who is managing collections today, the key lies in shared context and data visibility. This emphasizes the importance of collaboration between the finance, sales, and collections teams. Inefficiency in this aspect can adversely affect your collections target and lead to an increase in DSO (Days Sales Outstanding). Without access to the right data at the right time, productivity suffers due to constant back-and-forth communication. Moreover, it negatively impacts the customer experience.

In the fast-paced world of growing companies, the journey of collections can be both exciting and challenging. As sales soar and finance takes centre stage, the tug of war between these vital teams can hinder progress, cause delays, and create unnecessary complexity. But there is a beacon of hope - Collaborative AR. As your early-stage company gradually gains traction, Collaborative AR can pave the way for streamlined operations, efficient results, and greater collaboration.

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