If you offer credit terms then you probably have an accounts receivable collections problem and you may not even realize the negative impact that it’s having on your bottom line and your cash flow. Most companies sell on 30 day credit terms, yet most companies take between 45-60 days to collect on invoices. How long is it taking you? and how much money are you spending trying to collect it?
Typically companies don’t even focus their time and energy on collecting until a cash flow problem arises or they are looking invoices grossly past due with huge balances. Sound familiar?
There are many reasons why you need to pay attention to the time and money spent on managing receivables . First, the longer an invoice goes unpaid – the less likely it is that you will get paid! Industry research shows that only 30% of invoices older than 6 months never get paid!
You spend a lot of money on selling and every write-off has a direct and negative effect on your bottom line. Further, if you can reduce days sale outstanding by even a small amount you will save thousands of dollars annually in financing costs and you’ll free up a lot of cash to invest in your business. Wouldn’t it be nice to have some extra money to hire more staff or to purchase or upgrade your equipment?
ERP publishers have some great accounting and ERP products but none of them make it easy for your accounts receivable personnel to improve collections (we know – we use it too). Many of our customers use memos to track communications with customers regarding late payments and others rely solely on printed aging reports and highlighters to manage the collections process.
Imagine if you could send out dozens of past due notices to your customers with just a few mouse clicks; have all of their invoice history, account aging, and contact information available at your fingertips; and be able to focus your limited time on those accounts and invoices that need your attention the most. That’s a huge value – especially if you only have a part-time accounts receivable clerk and they don’t have formalized training in collections.
Accounts receivable management software allows you to do all of that and more, automating the entire collections process and helping you better serve your customers, save thousands of dollars annually with the reduction of bad-debt write-offs, eliminate disputes, and get paid faster. Try this ROI Calculator to help you determine how much you can reduce your outstanding accounts receivable and what your estimated cost savings will be using accounts receivable management software.