Improve cash flow by digitising Accounts Receivable
Improve cash flow by digitising Accounts Receivable processes
In this, the second in our blog series exploring Accounts Receivable (AR), we take a look at how digitisation can improve cash flow.
Cash is the lifeblood of all businesses – no one can afford long delays between products or services being delivered and payments being received. Reducing Days Sales Outstanding (DSO) is therefore a key goal for many businesses, but achieving it comes down to more than just the will of customers to settle debts.
There are many elements to the invoicing process. Hold-ups and inefficiencies at any stage can cause delays, frustration and customer dissatisfaction.
A multi-stage process
Firstly, invoices need to be accurately compiled, correctly addressed and rapidly issued. Next, customers need to receive statements and bills in the ways that suit them. Then, it must be simple and straightforward for them to take action - they need to be able to get in touch with the right person in the right way if they have a query for example – and finally, they should be able to make payment conveniently.
All too often, information sits with a number of different people on both the supply and customer side. They may have access to different information and have their own view of the latest account status. Worst of all, if someone critical to the whole process is out of office, everything can grind to a halt.
The result? Multiple phone calls querying and chasing payment, confusion and, most concerning of all, delayed cash coming into the business.
Draining manual processes
Manual work is time-consuming: teams can spend hours tracking down answers, following up with customers and trying to keep records correct and up to date.
Disconnected systems compound the problem with no ‘single truth’, information inside people’s heads and duplication of effort.
What’s more, if customers aren’t billed in the way that suits them, if the status of their account isn’t clear and if they can’t make payment the way they want to, they may reconsider where they take their business.
Improving cash flow by reducing DSO
Digitising the entire invoicing function can arrest the time drain of manual processes. From creation through distribution and follow-up to payment, if customers choose electronic billing, a centralised and digital AR process can improve cash flow by reducing DSO.
A single AR management platform brings all information into one place, automates manual tasks and enables clear and timely customer communications. Customers self-serve with convenient access to invoices 24/7, and the capability to make payment through a portal.
Cutting the time it takes to get accurate invoices to customers, reducing queries and follow-ups and streamlining payments all contribute to bringing cash back into the business faster. What’s more, improved data insight and visibility across accounts gives a complete picture of AR health, identifying potential non-payment risks before they become an issue. That way, attention can be paid to particular accounts where collections should be prioritised.
To find out more, take a look at YayPay by Quadient, an automated AR management platform.