Here is the scenario: You’re a successful company with a growing business and an expanding client list- that is great! But you are having trouble with your Accounts Receivable Management; your accounts receivable turnover is low, you are understaffed and are not ready to commit to hiring new employees, your DSO is nothing to be proud of, and you are having cash flow trouble because you just cannot get customers to pay you on time…this is not so great. You are not alone. Many companies find themselves in the exact same position.
The problem always is time.
As usual, accounts receivable management is another race against the clock. If you have a small accounting department, or are using your office manager as your AR clerk, you may see that they just do not have the time to effectively handle AR and that is no fault of their own. They probably have a tough time balancing regular communications and their other job responsibilities so those AR emails, phone calls, reminders, and other communications usually get pushed down to the bottom of the ‘ to do ‘ list. why? Because AR activities are time consuming and overwhelming, especially when you do not have a formal policy in place or are using spreadsheets, ageing reports, and other a manual tools to help you track your invoices.
So what do you do?
First things first, you may think you need to hire more staff- but that is not always the case. A majority of companies think they need more staff, but adding more staff will not improve your accounts receivable management if you continue to use ineffective processes.
If you continue with the status quo and continue to manage your AR with spreadsheets, ageing reports, ad highlighters, etc. you will continue to see the same results no matter how many employees you have because those processes do not help you communicate better with your customers, prioritize your collection activities, or make you more efficient. Accounts receivable automation can help you turn things around, streamline your processes, and become more effective without having to add additional employees.
What are the benefits of automated accounts receivable management?According to industry analysts PayStream Advisors, companies often realize the following:
- 10 to 20 percent reduction in Days Sales Outstanding (DSO)
- 25 percent reduction in past due receivables
- 15 to 25 percent reduction in bad debt reserves
- Increased cash availability
- Increased productivity and ability to hold down staffing costs
In fact, we know of one company who not only reduced their DSO by 40% they collected more money than the invoiced for in 2012! Watch the video testimonial here.