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Rethinking integrated receivables: Four strategies for building healthier cashflow.

The C-suite must contend with wide-ranging challenges each day — talent retention, rising debt and security risks, among them. It’s understandable that accounts receivable (AR) may not always be among their top-level concerns.

But given accounts receivable's impact on cashflow, operating capital and overall business resiliency, it might be time for a shift in mindset. To achieve optimal accounts receivable performance, CFOs and their accounts receivable management teams may benefit from taking a fresh look at four components of their order-to-cash cycles.

1. Integrated Receivables Processes.

Before initiating any process changes, some detective work is in order. Begin with your Day Sales Outstanding (DSO). How does yours compare to the industry standard? Does a review of your receivables find your company regularly receives partial payments? Are team members struggling to stay on top of past-due reminders? Are they staying engaged with at-risk customers? If you don’t like the answers to these questions, your accounts receivable performance is likely below par. Some process changes may be needed to avoid cashflow issues down the road.

2. Internal Collaboration.

Among the most overlooked – yet vital – ways to minimize cashflow risk is through collaboration, both within the accounts receivable function and across sales, customer service, IT and other departments that engage with your customers. In other words, what one group knows that another one doesn’t, CAN hurt you. A customer service team that doesn’t communicate a customer’s dissatisfaction to the accounts receivable team may contribute to delayed payments. Conversely, an accounts receivable department that keeps the sales team abreast of a customer’s past-due balance can inform the approach to terms on the next contract.

Review your processes and technologies. If necessary, adjust their design to make it easy for staff to:

  • Collaborate with others whenever and wherever they wish.
  • Conduct and preserve conversations.
  • Support multi-solution scenarios.

3. Analytics.

For CFOs and other members of the C-suite, access to analytics has become ever more important for long-term forecasting and day-to-day decision-making. That is why now is a good time to assess the role data plays within your accounts receivable department. Many companies now aim for an environment where users can monitor performance data on DSO as well as BPDSO (Best Possible Days Sales Outstanding), CEI (Collection Effectiveness Index) and payment disputes.

With the right AI solutions, customer insights on everything from payer performance to credit risk management, as well as predictive analytics on payment projections and collections forecast are possible. All can contribute to your ability to understand cash flow risks and plan future business spending accordingly.

4. The customer experience.

Your success in building customer loyalty depends in large part on your ability to differentiate your products, services and overall customer experience from that of your competitors.

That means doing everything in your power to address their core business needs, which typically include:

  • Allowing them to pay using the method – virtual card, ACH, direct debit, check – of their choice.
  • Offering a convenient portal where they can track invoices, make payments, view statements
  • Making it easy to do business together with rapid onboarding, flexible payment terms and other conveniences.

The bottom line:

Your company’s growth and resiliency are directly tied to your ability to expedite the order-to-cash cycle. Streamlined accounts receivable processes, strong internal collaboration, helpful analytics, and a customer-friendly approach to payments all contribute to your success. All can benefit from an automated accounted receivables solution that removes manual bottlenecks, addresses customer needs and supplies the real-time data that members of the C-suite can use to predict and protect cashflow.

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