Business transparency is a frequent topic of debate. Some companies prefer to keep their information close, while others prefer everything out in the open. But for accounts receivable (A/R), a transparent approach is critical to creating trust in financial relationships.

Transparency creates ease of understanding

Taking a transparent approach to A/R makes the entire process more intuitive. Buyers, sellers, and creditors all understand their own — and each other’s — place in the process. When someone is uncertain of some aspect, they should know where to find the information they need. Maintaining a transparent A/R process allows for fewer misdirected questions, misunderstandings, and avoidable problems.

Transparency creates trust

It’s a well-known fact: People don’t trust what they don’t understand. When the A/R process is obscured or unclear, it creates inherent distrust between participants. Trust is the foundation of a strong business relationship, so trustworthy systems are inherently valuable.

When working with systems they trust, people are more forgiving of delays or errors. Transparency ensures data is always conveyed to the appropriate people and places, without unnecessary delays. When things go wrong, a transparent A/R system earns more latitude than an ambiguous one.

Taking a transparent approach

Talking about being more transparent with A/R is one thing, but many struggle with implementation. Keep these considerations in mind when adopting a transparent approach:

  • Provide detailed invoices and receipts. The goal is to make information clear and available. The best first step to doing so is to ensure invoices are detailed and accurate.
  • Keep partners informed on the status of their transaction/credit. Just having the information available is a good start, but actively updating partners on information is better. Offering information is the best way to ensure it reaches those who need it.
  • Aim for a “healthy flow of information.” Encourage appropriate, open communication among every individual involved in A/R processes. Active information sharing throughout the A/R process keeps everyone well informed and on the same page.
  • Resist the urge to conceal mistakes. Everyone makes them. Most errors are small and easily fixable when caught early. But concealing even small mistakes can have ripple effects down the line, and even if it doesn’t, owning up to mistakes builds trust and earns your company a reputation for honesty.

Transparency may feel counterintuitive at first. Keeping all your cards close to the vest is intrinsic to a world of trade secrets, but A/R is not the place for obscurity. A transparent approach to A/R makes for a smoother, more trustworthy process for everyone involved.

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