We want to be paid today and put that cash to work immediately. Waiting for checks to be mailed, received, then processed or similarly, processing through the Automated Clearing House (ACH) can take time, tying up your receivables and kills your balance sheet. The value of instantaneously decreasing your DSO, increasing your cash position while allowing you to borrow less and invest in more that matters.
Unfortunately dealing with late payments, incorrect invoices and possibly bad debt inhibits your business. The need for consistent policies, culture and an integrated platform that handles all of the above is not far fetched. Research indicates that A/R management is neglected because you don’t feel the pain because you have not been made aware of it.
Below are four reasons you are not getting paid on time.
1) Invoice Problems
Customers want to pay you on time, however if there are problems with their invoice your business will not be paid promptly. We must question why are we not getting paid. Conducting an analysis of the root cause on late payments will give you insight to the top reasons. More often than not, you can easily turn those trends around. Post these questions to your A/R management; Is there a trend with which payments are consistently late? Is your current non-integrated platform lagging? Do you have trouble keeping track of customer data?
2) Weak Accounts Receivables Policies
Providing training to your accounts receivable team is vital to gaining a better position and collecting payments on time. Your A/R team must collaborate with your sales team to work in unison to improve the terms and consistency. People are creatures of habit and so are your customers. Statistics indicate that by being consistent with each customer your payment collections will improve.
3) Bad Customer Data
You are only as good as your current data. Many businesses do not have a formalized credit and collection process or software that supports it. Is your team working with outdated excel spreadsheets, old reports or information that was incorrectly manually input into your CRM system? These inefficiencies become factors in receiving timely payments.
4) Lack of Resources
The top reason for not getting paid is invoice problems, failure to get the invoice out on time and working with bad data. Your top asset is the A/R team. Use them to identify the following areas for improvement:
Roles and responsibilities within your A/R team
Increase effective training
Improve onboarding process for new hires
Create a culture of feedback
Revisit process and procedures quarterly
Without cash coming from sales creates a bottleneck leaving your company scrambling to issue debt on payments which leads to extra fees. Speed up your A/R process by using an A/R system to streamline applying cash.
In today's digital world, no one really uses checks regularly for their personal transactions. Ask anyone outside of the finance industry the last...
Sign Up to get the latest News
Listed by CFO Tech as one of the Top 10 Accounts Payable Solution Providers 2018 and 2019 and by CIO Review as part of the 20 Most Promising Corporate Finance Tech companies for 2017, OnPay Solutions streamlines processes for accounts payable by automating invoice processing and payments.