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How to Close the Books on Aging AR & Set 2021 Up for Success

There are a lot distractions at the end of the year. But closing out your books on 2020 should be an end-of-year priority construction companies don’t overlook. 

Join this webinar to hear tips for closing out aging AR from collections specialist Matt Shanahan of Lockstep so you can close the books on 2020.

Find out:

  • Powerful documents for getting you paid in days instead of months
  • Actionable tips to close outstanding jobs so you don’t carry them into 2021
  • How to start 2021 jobs on the right foot so you get paid quickly



Antoinette Abboud: (02:21)

All right. So it looks like we’re going to get started. Thank you all for joining us, uh, for a quick conversation on how to close your books on aging AR and set 20, 21 up for success. Um, my name is Antoinette Abood. I’m the director of customer success at Levelset and we are joined today by Matt from lockstep. We’re going to be doing some introductions, just a quick overview of, um, the agenda today. We’ll be talking about some last minute things that you can do right now to close out your aging on 2020 jobs, and then how to set up your customer relationships, uh, for success in 2021, as well as prioritizing the most important collection items and benefiting from some automation. For those of you who aren’t familiar with level set, we are a company that works with contractors, just like you to help sub suppliers. Everyone on that payment chain get paid faster through transparency and really strong customer relationships.


Matt Shanahan: (03:33)

And just a little bit about lockstep we’re on a mission to connect the world’s accounting departments so they can work better together. We have two products, lockstep inbox, which is an email really built her accounting departments and also lockstep collect, which is an advanced AR automation solution. And we’ll use some of our experience with lockstep collect today to talk about how to improve your collections performance.


Antoinette Abboud: (03:58)

Wonderful. Thank you. And I will apologize. My dogs are on a roll today. So, um, what we’re going to do now is stop the share so we can have a conversation and, uh, please remember post any questions that you have in the Q and a, and we’ll be more than happy to answer them. Uh, first I’d like to start with a question for Matt. Um, what are you finding are the most common reasons for slow payment in 2020?


Matt Shanahan: (04:26)

Well, 2020, it’s been a weird year for a lot of people, and we all know that it’s a kind of an understatement at this point, but you know, the, the dynamics of somebody’s business will impact their payments. If they’re having their own cashflow problems that will have knock on effects for you. That’s clearly one thing that can, that’s been, it played more this year than in years past. In fact, at radius indicates that it’s been up late, payments are up 50%. So year over year, nothing changed except the pandemic. That’s what we’re saying. So that’s clearly that macro economic environment, it’s one of the things that’s coming into play. Um, but the other is that because everybody’s being conservative with their cash flow, they are paying attention to people that are front and center with them. Um, so what hasn’t changed is your ability to say, look, I’m not going to release more material to you as an example, unless you pay off some of your bills. So that time for them to keep their business flowing, they need their materials in that example. And so I think those are things that, you know, some parts of the business have changed and then some parts haven’t


Antoinette Abboud: (05:40)

Definitely, we’re seeing a lot of the same with some of our customers. And that is a really great segue into what can people do right now. I know that we’ve, we’ve chatted a little bit about this, but to, to make sure that they are prioritizing their with their customers, um, and closing out some of those 20, 20 invoices that maybe they were hesitant to pursue a little bit earlier on, and we’re giving a little bit more leeway to people because of things like COVID.


Matt Shanahan: (06:11)

Yeah, well, well, we know that, you know, working with customers is all about relationship. Um, and the first thing is important to know is your customer themselves, uh, your account, your counterpart in accounts payable has what they call days payable outstanding. So they have their own policies for how they pay. So a lot of organizations will say, I always pay 10 days late. That’s just what we do, uh, to conserve cash. It’s not, and they’re very predictable on it. So what you then want to be concerned about is when somebody who’s not being predictable, if they’ve always paid 10 days late, and now they’re 20 days late, there’s something afoot. And that’s because just like accounts receivable, accounts payable has certain service level agreements that they need to make. They’re managing cashflow in the same way that AR is. And so when you see somebody’s payment behavior starting to change, that’s when you want to say, there’s potentially more risk here and I want to have a conversation and find out what’s going on. So that’s part of just really knowing your customer. I’d be interested to see if you’ve seen similar things or what, what you’ve heard.


Antoinette Abboud: (07:20)

Definitely. I think that for a lot of people, um, COVID really put into perspective what their existing communication process with was with their customers. And so we’ll have people coming to us being saying, these people were never late before, but now they’re late and we don’t know what to do. And we’ve missed this window for proactive communication because it’s, it’s already late. Um, and one of our goals is to one which we’ll get to in a minute, help people get into the habit of proactively communicating with all customers, regardless of whether or not there’s a problem. But then once there is a problem opening up the line of communication. So it’s not adversarial and make sure that it’s, um, productive communication with exactly what you were saying. What’s going on with your business. Is this an expect change? Sometimes it is. Sometimes they’re just, they forgot or somebody else like in construction is sending that pre preliminary notice, prioritizing their payment.


Antoinette Abboud: (08:31)

And so you’ve just sort of fallen to the bottom of the page because they have money tied up in other jobs. So we’re, we’re seeing a lot of that. And I think that one of the things that we’re working with people on is we have, there are friendly documents. You don’t have to escalate it and file a lien after 40 days, if you haven’t received payment, there are ways that you can send out things like invoice reminders that have a really pleasant introduction that is just checking in on people and really being human. I think that that’s something that really plays and works well, especially right now when everyone is going through something.


Matt Shanahan: (09:11)

Absolutely. Yeah. To your point about being human, uh, people still do business with people, right? I mean, I think you, you know, you can’t forget that. And the amazing thing is nice. People get paid first. So being empathetic, you know, saying, Hey, how are you doing? You know, just open-ended, um, you know, what’s going on for your business. Uh, can we talk about kind of your situation and, you know, work out a plan between you’re much more likely to get paid if you have that conversation than if you just say, Hey, you’re late.


Antoinette Abboud: (09:43)

Exactly. It’s a assume, good intent. Don’t go in assuming that they’re trying not to pay you, um, as soon as something else is going on and then you can take it from there 100% agree. Um, do you have any kind of documents or like phone call, not scripts, but talk tracks that you recommend for people or ways of organizing it if they have a lot of AR outstanding right now?


Matt Shanahan: (10:11)

Absolutely. And I think that’s one of the, the best practices to have is just having a script, um, and practicing, you know, it also, you know, it can be, if, if you haven’t had to do it in the past, let’s say you’ve had very predictable receivables. Um, and now you’re having some that are going past due and you’re feeling uncomfortable about that conversation. The reality is the other person’s feeling uncomfortable too. You know, like you said, they’re probably not, you know, trying to cheat you out of something. They’re probably, they’re in a rock between a rock and a hard spot as well. Everybody’s managing things. So having, first of all, having a script, thinking it through of like, what am I going to say, practice it once or twice. So you feel comfortable when you get on the phone and then be confident because one of the things about being confident is you can listen, you can be more open to listening to what they’re saying. Um, and so by that practice and being ready, you’ll have a confident call where you can have a natural conversation and get to a resolution that both parties can agree to.


Antoinette Abboud: (11:17)

100% agree there. It’s, um, we’ve been practiced some of the calls that we’re doing to just with new, when new hires come in, it’s very similar to a sales function, uh, where sometimes you do just need to get really comfortable having that conversation before you get on the phone and start making those calls. Um, do you find that the calls are more effective than the email communication? Where, where are you on that in terms of like targeting your audience?


Matt Shanahan: (11:48)

Yeah. Calls or, you know, the way that as, as you were talking about really proactive communications, um, automated, imagine the way the analogy I always like to use is, um, we have a great turnout today for this webinar. So it’s amazing to see, you know, this is a good topic and everything, but if the marketing team at Levelset had to one by one email, all the potential people to attend this, imagine how many handwritten emails would go out. That’s just mind-boggling right. So marketing of course would never do that, but yet we expect accounting teams to manually write emails, right. To send this out. And that’s the part that needs to change is you really want to use email automation to send reminders, to send updates. And then you’re using the phone calls when the traditional things haven’t really worked. Um, and it is important to know point. This is going to take human intervention blend of the two. And a lot of times it’ll take testing. You know, we have customers that test who reminders before I call or three reminders, what, you know, statistically what works out. Um, but it is, you know, it’s really both. You got to use both together.


Antoinette Abboud: (13:08)

I definitely agree. And it is about finding the right mix, but, um, it’s always interesting to me, you can send out a bunch of emails and, um, you don’t want to overload people, but sometimes you’ll have sent maybe 10 emails in the last let’s just say year or something. Somebody might reply to the third email that you sent. They’re not necessarily based off what the title is. What’s on their mind at that time. Um, maybe they saved that because they thought, Oh, I have to get back to that person at some point, but now is not the time. So it’s always important to give them the option to, I think, for your customer and how they want to communicate. And email is a really great way to scale your communication, as you were saying, and then really focus the phone, call energy on the people who need it the most. And that’s also where the, the a well-thought-out email script can still be incredibly human, um, and open the door for a really productive phone conversation.


Matt Shanahan: (14:12)

Yeah. And how have you, you know, when you think about that, how do you think about assessing risk on, on a receivable? Yeah. Is it just the number of days or other things that you put into it?


Antoinette Abboud: (14:23)

It’s funny. We talked to a lot of our customers about that and, uh, for a lot of them that the email component, they want it to be standardized. The moment that that receivable is late, depending on what their terms say, typically 30 days, some of them have custom amounts of time depending on the customer, but normally it’s at 30 days. So at 31 days that email goes out and it is just a friendly reminder. It, the language is very friendly. Innocuous it’s this amount is now past due. Let’s get on a call to talk about it. And then they’ll typically wait a couple of weeks. And then they do start to prioritize it by, um, also by dollar value. So they might not call on the invoices that are under 200 bucks, but they’re going to call on everything else. Um, and then I think they’re also looking at it by customer too. So which customer has the most outstanding, no matter how many jobs they’re on, that’s also where I’m going to focus my phone calls, and then you have that second invoice reminder go out at 60 days. So I think those are, that’s probably the most standard cadence that I’ve seen, um, with our customers and what they find to be really productive.


Matt Shanahan: (15:50)

Yeah, no, that makes total sense.


Antoinette Abboud: (15:53)

And so when, once people have done are done kind of reacting to 2020 and wrapping our heads around everything that has happened and how business has changed a little bit and how it’s still the same. What can people start doing now in your mind to make sure this isn’t a problem in 2021 and pandemic aside that they’re setting themselves up for a really productive, speedy payment?


Matt Shanahan: (16:27)

Well, I think the, uh, what 2020 has shown, you know, are the underlying conditions for a lot of accounting departments. You know, when you sort of built your process on top of outlook and Excel, it’s really hard, you know, whether you’re doing remote work or trying to deal with, um, increased workload because of increased risk, you find the limitations of those tools very quickly. And so I think there’s, there’s really three things. When you think about, um, creating, uh, you know, kind of scale and leverage and, and de-risking going forward. One is that, as we’ve talked about is email automation. Do you have something that you can configure templates and rules just like a marketing automation system would do, but really around the aging of receivables, um, and having that in place so that it’s just, it’s on autopilot. The other part that puts it on autopilot is moving away from paper checks of any sort right, and getting into online payments.


Matt Shanahan: (17:27)

So do you have a customer self-service portal that allows people to see their statements, to answer that for themselves, select invoices, make payments, those kinds of things. And then the third aspect is really, um, an ability to work remotely as a team. You know, how do you have an activity management that allows each of them to say, Hey, you know, I can pass work back and forth versus relying on outlook inboxes. So those are the things that, you know, if you have that capability in place makes, makes performance of collections much better bottom line, it makes your bank balance bigger. Um, and it lets you focus on the higher priority, you know, really relationship building activities.


Antoinette Abboud: (18:15)

And so when you’re talking about some of the activity management with teams, I think everybody zoom has become one of the new connectors, things like Slack, help get you out of email and communication. What other types of technology do you think people should be investing in if they haven’t already to help get them out of that kind of Excel, Google sheets?


Matt Shanahan: (18:40)

No. That’s where an AR automation solution like ours comes into play. So if you think about, as I mentioned, you know, the technology stack of outlook and Excel, what are you doing in Excel? Oh, I’m manually aging, these, um, invoices, then I’m creating a call list in Excel, right. And I’m having to track my call list. And then based on when I get them, I do a follow-up, Oh, they’ve promised me something. So I have to record the promise in there. And then I’ve got to do the followup in there, and then I’ve got to do the installment plan. Now those are all activities that, that promise that follow up the call list. All of that is being manually constructed by each individual and then shared around. It’s very inefficient. Imagine if I didn’t have to create my own call list, it was created for me.


Matt Shanahan: (19:27)

Right. That’s the activity management. And after I make the call, I don’t have to record the follow-up it’s recorded for me. Right. So I can move on to the next one. And everybody can see, like how many, how many activities got completed today as a group. And who’s, you know, who might need some coaching. That’s what, when we talked about activity management, it’s really saying we are going to get rid of, you know, outlook and Excel to manage this as real workflow, because you would never have a support organization that I, you know, one of the things you can think about, think about running a support organization, something like outlook and Excel versus Zendesk. Like you just wouldn’t do that. So that’s really the, the idea behind it.


Antoinette Abboud: (20:06)

Definitely. And I think for us, a lot of this is going into just how can you make your, um, accounts, receivables team as proactive as possible. And a lot of the enablement tools that you give them, whether it’s some type of AR automation, um, using, uh, a tool like Levelset, there’s so many proactive options. So you take as much off of someone’s plate as possible. And then they can really focus on the tasks that have to be manual, but also really strong return. Um, so I think that that’s something that’s really important too, when you’re looking at being really proactive in 2021. Um, really front-loading the automated communication at the very start of your jobs, as soon as you’re voicing making sure that you’re getting things out there. And I think stepping away from the really reactive mindset of, you know, if I, if I send something too early, it’s going to upset someone it’s like, not if it’s the right communication. And I think that that’s really what a lot of that success is about is how much of your time is proactive versus reactive. And how do you balance out all of that communication and make sure that it’s getting out, even if you’re not the one that has to manually click a button.


Matt Shanahan: (21:34)

Absolutely. Yeah, no, it’s nice. Cause you, like you said, you get to scale up everything that you’re doing


Antoinette Abboud: (21:43)

And what’s one piece of advice that you would give to someone who feels like they’re too busy, kind of trying to get their head above water for 2020 to do all of these things getting into 2021.


Matt Shanahan: (22:04)

Uh, well th w one of the analogies we always cause we, I think along those lines, we always talked about somebody who’s running next to their bike and, and, and you say, why don’t you get on that? I’m too busy. I can’t get on my bike. Right. So then I’m just going to run with it on my side. So you do have to kind of find, find that extra push, whatever that may be, but realize it has a return for it. That it, it has a lot of recovery. The other thing that, you know, what you want to do is you want to look for the right partner, someone like Levelset right. That brings the team like customer success into play to help you make that transition. Right. And, and kind of look into it, you know, what we see for ourselves. And, you know, maybe you see this as well.


Matt Shanahan: (22:47)

You know, while a project may take six weeks to fully implement, you know, to get all the automation in place and the portal up and everything else, when you look at the active time that, that, you know, our customers spend on it, it’s very fractional, right. And it’s just over a six week period of time. So it’s sort of doable. And the return on the backside is really important. So I think that, you know, the number one advice I would do is find a, find a partner that you can work with, who has the experience, um, versus trying if you’re doing this on your own for the first time, it’ll be, it will be daunting and there’ll be lots of dead ends. But with the right partner, you’ll be very successful.


Antoinette Abboud: (23:30)

I, 100% agree. We always hear, even after someone signs up, Oh, this is going to take too long because you assume, since it takes you so long already that it’s going to be a lot of effort, but really if you just give that 10 minutes at the beginning 15 minutes there, it becomes so easy. It’s just running in the background for you. So that small time commitment at the front end is definitely worth it. Um, and then you can see the light at the end of the day.


Matt Shanahan: (24:01)

Yeah. The other, the other way to think about this also is the only thing that you control and accounts receivable is the number of activities that you perform. And it’s literally the only thing you control. So the question becomes, how can I increase the number of activities that I’m going to do? And that’s where automation and portals and things like that come into play. You’re already working as hard as you can possibly work. So once you realize that limitation, suddenly these other solutions make more sense,


Antoinette Abboud: (24:37)

Definitely let the, let those other things work for you. Right. Um, and I know Ingrid had a question. We will be sharing out the recording for you at the end. Do not worry if you came in a little bit late, um, we’ll be sending that out for you. Now we do have about six minutes left. So I want to remind everyone that you can throw some questions into the Q and a, uh, so Matt and I will be able to answer those for you. Otherwise I will keep asking questions too. Um, but I’d love to hear from anyone in the audience who has had a, you know, interesting 2020 and wants some, either advice or to share some stories where they’ve been able to kind of collect on some of these invoices that they weren’t sure they’d be able to collect on. Um, any questions


Matt Shanahan: (25:28)

It looks like there was one interesting one here. What are some seemingly simple mistakes people make all the time, either in process or in their strategy? Um, you know, one of the simple mistakes that we see is it’s interesting is the wrong email address. So they send the email to the wrong person and they don’t find out about it until it’s 30 days late. So really having all your contacts be correct, and first, and sometimes they’re missing contact information. So I think, you know, that is one that has an amazingly big impact on your receivables that, um, is easily overlooked.


Antoinette Abboud: (26:11)

Definitely. Um, sometimes we even have that problem when there’s turnover at a company and the email address is wrong, or somebody entered something with just like in the wrong place. Um, so it’s really important to clean up your contacts. And I don’t know if you found this, but sometimes I think companies have been doing things a certain way for so long and when they come it’s because they’ve noticed that they’re having an actual problem on a specific invoice or job. Um, and the truth is that you never know when there’s going to be a problem. You never know when there’s going to be a pandemic that causes economic issues. You never really can tell. And so, um, the best policy is that proactive policy communicate early and often build that relationship, build that trust. And even with the people that you have that relationship with, like spend out what you need to send out and communicate, they’re not going to be offended or assume that you’re saying they won’t pay. Um, I think that that’s something we run into a lot is where people are only going to use invoice reminders or these, you know, preliminary notices, which are required, but not threatening. Like you, they’re only going to get paid on jobs where they think there’s going to be a problem.


Matt Shanahan: (27:41)

Well, I mean, as you, as you think about it as a consumer, we, we never get offended when the credit card company says your credit card is coming due. I may not want to pay it, but that, those are, those are the things that, and then of course you do pay cause you want to, you, you wanted credit. Um, you know, when you’re not, so this, this is behave very similar to most consumers. And so when we think about our consumer experience, why wouldn’t we want a similar experience in business?


Antoinette Abboud: (28:10)

Exactly, exactly. And, and everybody wants to be reminded at some point, it’s just how you do it. Um, I think that those are things that, um, a lot of this webinar is addressing is how to do that in the right way. And I know that with our team, you can reach out at any point. Um, we have really wonderful resources on how to communicate. I’m sure lockstep has a lot of similar information as well. Um, because it is really important to start that communication early and not wait. I think that’s a big mistake that people make is waiting until something is a problem. Did we get any other questions here?


Matt Shanahan: (29:04)

There was a question about what are the most common reasons for slow payment? What have you seen?


Antoinette Abboud: (29:10)

So for us, I think that there have been a couple of things sometimes in construction it’s, um, some type of delivery, holdup, something up the chain that’s causing that to become a problem, especially if you’re working with a sub sub or a sub contractor. Um, so a lot of times it’s something that’s even outside of your customer’s control. So they’re not necessarily the one holding back payment for whatever reason. Um, and in 2020, a lot of the times, if the payment isn’t prioritized by sending out a prelim, their cashflow is immediately going into another job right away, so they can start work somewhere else. Um, so it’s just getting slower at the top and that trickles down. Um, so that’s, that’s what we’ve been finding. Have you found anything different?


Matt Shanahan: (30:11)

No. I mean the, usually the reason for slow payment is an issue. Right. Um, and whether it’s, you know, depending on the industry and the issues, I mean, clearly in construction, I think you’ve got a great handle on that, but I, it points back to the fact that there’s probably not a most common way. There’s lots of different ways. And I think, you know, rather than as we discussed, don’t jump to conclusion on, on your customer situation. You know, when something is citizen ag, just reach out and try and unpack what’s going on and come to a plan together.


Antoinette Abboud: (30:50)

Exactly. I think it’s, it’s just makes it a lot easier to pick up the phone, send an email and find some time to talk, um, to see what exactly the problem is because you’re right. It is just a problem and it could be a million different things. Well, it looks like we are kind of at time. Um, I want to be respectful of everybody’s day. I know it’s the holiday season. Um, Matt and I will be sending out, um, this recording for you. So if you did miss earlier parts, don’t worry. Um, and then you can also feel free to reach out with any questions that you have that you didn’t get a chance to ask, um, or that come to you when you’re going and starting to make these phone calls and send out these automatic emails. Um, we’re our teams are both here to help Matt. Is there anything that you’d like to say to close?


Matt Shanahan: (31:53)

No, I hope this useful. And as we discussed the resource, that locks, um, and, and so now thank you for, um, asking us to join you today. So I hope it was helpful.


Antoinette Abboud: (32:07)

Thank you. It was incredibly helpful and we really appreciate you and your team, uh, coming in and taking the time to do this with us and, uh, wishing everybody the best holiday season and a really great close out to 2020. Um, and we’ll hope to hear from all of you soon, if you need any help getting a head up on some of that aging,