How Financial Directors Can Optimise Collections with Technology: Best Practices for Reducing DSO Quickly
How Financial Directors Can Optimise Collections with Technology: Best Practices for Reducing DSO Quickly
As a Financial Director, maintaining a healthy cash flow is essential for the financial stability and growth of your organisation. However, managing collections can be a challenging task, especially when dealing with overdue payments.
Before we get into the rest of the post, if you would like to learn about how Invevo helped Adecco reduce their DSO by 30 days, sign up for our upcoming webinar on April 25th by CLICKING HERE!
Now, here are some of the best practices for optimising collections to ensure effective cash flow management for Finance Directors.
DSO Reduction Strategy
Days Sales Outstanding (DSO) is a critical metric in measuring the efficiency of your accounts receivable collection process. A high DSO indicates that your customers are taking longer to pay their bills, which can negatively impact your cash flow and overall financial health.
One of the most effective ways of reducing DSO is by accelerating your payment processes. Invevo's platform simplifies this process with automated invoicing and payment systems through Invevoâs self-service portal. This means that your customers can make payments quickly and efficiently, reducing the time you take to receive payments and improving your cash flow.
Efficient Dispute Handling and Resolution
Disputes can cause delays in payment and increase your DSO. Disputes typically arise due to discrepancies between what the customer expects and what they receive regarding products or services or inaccuracies in invoicing. Common reasons for disputes include:
- Incorrect pricing or charges
- Differences in product quality or specifications
- Late or incomplete deliveries
- Missing or incorrect information on invoices
- Miscommunication or lack of agreement on payment terms
To overcome disputes and minimise their impact on cash flow, Financial Directors (FDs) need to implement effective strategies and processes:
- Clear communication: Establish clear communication channels with customers to understand their expectations and address any potential issues before they escalate into disputes.
- Accurate invoicing: Ensure the accuracy of invoices by implementing stringent quality control measures, including double-checking pricing, product details, and customer information. Utilising invoicing software can help automate and streamline this process.
- Dispute resolution process: Develop a well-defined dispute resolution process that outlines the steps to be taken when a dispute arises, including escalation points, responsible personnel, and target resolution timeframes.
- Collaboration between departments: Encourage cross-departmental collaboration, particularly between sales, customer service, and finance teams, to address disputes promptly and effectively.
- Proactive monitoring: Monitor customer accounts regularly for signs of potential disputes, such as recurring late payments or unusual patterns in ordering and invoicing.
- Training: Provide training to employees who handle customer accounts and disputes, equipping them with the necessary skills to resolve issues efficiently and professionally.
- Leveraging technology: Adopt accounts receivable management tools like Invevo to streamline the invoicing process, provide real-time visibility into customer accounts, and automate dispute resolution processes.
By addressing the root causes of disputes and implementing effective strategies, FDs can minimise their impact on cash flow and maintain strong customer relationships.
Learn more about managing disputes at our upcoming webinar with collection experts from Adecco by CLICKING HERE đ
Streamline Your Collections Process
Streamlining your collections process is like composing a symphony; every instrument has a part to play, and Invevo is the conductor. Using our cloud-based multi-tenancy platform, you can automate your invoicing and payment systems and create event-driven automation to monitor change for real-time credit block and risk management decisions. This harmony will result in an optimised collections process and better cash flow management.
Use Behavioural and Risk Scores
Collections technology will allow you to use behavioural and risk scores alongside customer data to automate collections. You can segment your customers and develop collection strategies for each segment based on their size and payment behaviour. You can also use behavioural and risk scores to identify changes in payment patterns, such as slow payments, and indicate the need for early intervention.
Quick note: Define a Credit and Collection Policy For Your Business
Having a credit and collection policy is crucial to ensure consistency in your unique collections process.
Your policy should outline the credit evaluation process, credit limit, and when to contact customers about late payments.
Monitor Payments from Regular Customers
It is essential to maintain accurate and timely records of your customers' payment histories. This will help you identify changes in payment patterns, such as slow payments, and indicate the need for early intervention. You can segment your customers and develop collection strategies for each segment based on their size and payment behaviour.
Expert Technical Support for Seamless Optimisation
Here at Invevo, we understand that the transition to a new accounts receivable management software can feel like juggling flaming torches â a daring task for any Financial Director. But fear not, Invevo's got your back! Our expert technical support team is here to guide you through this thrilling adventure every step of the way, and we promise to keep the flames at bay.
Our dedicated team of professional jugglers (just kidding, they're tech experts) will assist you during the initial setup, integration, and configuration of the Invevo platform, ensuring it aligns with your company's unique needs and processes. And don't worry, we won't leave you hanging after the training wheels come off. We offer comprehensive assistance to your finance team to help them proficiently use the platform and maximise its potential to improve your collections process and cash flow management.
Moreover, Invevo's technical support doesn't vanish like a magician once your system is up and running. We provide ongoing assistance to address any questions or concerns you may have, and we'll even throw in timely updates and improvements to the platform. Our goal is to empower Financial Directors with the tools and support needed to confidently manage and optimise their accounts receivable process in today's fast-paced and technology-driven business environment, all while keeping a smile on their faces.
Conclusion
Managing collections can be a challenging task, but with the right technology and best practices, Financial Directors can easily optimise their collections process and ensure effective cash flow management.
By implementing the practices above, you can improve your collections process, increase your cash flow, and ensure the financial stability and growth of your organisation.
If you're interested in learning more about optimising collections, join us on the 25th April at 11am for our Live Webinar: âOptimising Collections in a Technology-Driven Worldâ, where we will be joined by collections experts from Adecco, one of our largest clients. Youâll hear directly from them as they share their experiences, successes, and lessons from implementing Invevoâs cutting-edge technology.
Register (in less than 1 minute!) here: Â https://events.teams.microsoft.com/event/38000cb5-e5af-4ff5-9ddf-57cd802e33aa@839811d7-358c-4428-b810-27fdb13c58e7