A Two-Fold Approach: Streamline Your Revenue Using ECM-Driven Receivables Processing
Your Accounts Receivable department works hard to ensure customers pay for the goods and services they purchase from you in a timely manner, but in many cases, operational inefficiencies make this more of an ideal than a consistent reality.
In fact, according to a recent study by The Philadelphia Inquirer, 93% of businesses experience late payments for their services, and according to the 2022 Atrius Payment Practices Barometer covered by Forbes, 47% of credit sales are paid late.
These late payments can drastically affect your business’s revenue streams, hindering your organization’s plans and aspirations with financial setbacks. Luckily, there are ways to reduce and even eliminate many of the inefficiencies your accounts receivable department faces.
By taking advantage of AR optimization through ECM (enterprise content management), organizations can drastically reduce their days’ sales outstanding, shortening gaps in their revenue and paving the way for future financial investments.
Three Factors That Bloat Days Sales Outstanding
Days’ sales outstanding is the number of days it takes for a vendor to be paid for their services, and while this number varies greatly by industry, some factors can disrupt this metric. Below are three of the most controllable factors to help reduce days’ sales outstanding and streamline your revenue.
1. Lack of Customer Visibility
There are many instances where your customers may need help managing delivery receipts and other proof-of-service documents that prevent them from paying promptly. Customers will not pay for what they can’t prove was received, leaving the burden of proof to your accounts receivable department and their copies of these documents.
Similar disputes can also occur with improperly managed customer invoices, leaving it up to accounts receivable to clarify the exact payment terms by providing copies of the original invoices.
Ideally, your organization would always have quick access to these documents, but this is not the case for many businesses, leading them to scrambled searches for information.
2. Effortful follow-ups for customer payments
Even with no disputes on a charge, some customers may not consistently make the payment due date. This lack of timeliness often prompts accounts receivable staff to reissue account statements or consistent reminders and then monitor the ongoing status of these customers’ payments.
But for many accounts receivable departments, the effort involved in these tasks poses a real challenge. Consistently reaching out to customers takes time away from other crucial tasks. What’s more, payment status may be difficult to track without convenient access to the documents that provide the most current status and any collection activities.
3. Time-Consuming Data Entry
The information from completed sales orders must inevitably be entered into your company’s financial system, but for many organizations, this process involves manually keying handwritten order forms that take up tremendous amounts of time and effort.
Bottlenecks in this data entry can lead to extended days’ sales outstanding as products and services cannot be delivered until an order has been processed for fulfillment.
Step 1: Eliminate Document Bottlenecks with ECM
Implementing ECM solutions for accounts receivable can help organizations better manage the signed delivery tickets, work orders, and original invoices that help prove they delivered their services and agreed upon a specific price.
By capturing the information on these documents through AI-driven OCR and using it to digitally index and file them away, organizations can locate these documents in seconds using any number of index fields. With the documents digitized and quickly accessible, the platform will help resolve payment and delivery disputes quickly, allowing your accounts receivable department to provide instant proof for any conflicting records.
This document access also grants your accounts receivable department immediate visibility into your customer’s payment status, letting them know if follow-ups need to be sent. These documents can even be digitally checked for payment status to automatically distribute reminders, saving your accounts receivable department additional time.
By moving to paperless accounts receivable processes, organizations can reduce bottlenecks and days’ sales outstanding while simultaneously making these processes more cost-effective.
By eliminating repetitive data entry and other costly processes and encouraging prompt payments, ECM-assisted accounts receivable departments procure payments faster with less time, money, and effort.
Step 2: Collect Faster With Web Forms
For organizations who deliver services outside their offices, including trade workers like HVAC technicians, electricians, and plumbers, the order cannot even be processed until they return to the office with this documentation showing what services were provided.
The combination of Enterprise content management (ECM) and Web Forms solutions can significantly assist with the factors that can reduce days’ sales outstanding by giving your field technicians the ability to submit orders for jobs as they are completed rather than waiting until they return to the office. This allows your Accounts Receivable departments to enter the order and invoice immediately and allows you to collect your revenue.
Taking web forms a step further, organizations can also send customers their invoices as web forms, reducing data entry for your accounts receivable department and creating a more convenient payment process for your customers. With the ease at which customers can submit this form-based invoice, the improved process has the effect of prompting earlier payments.
How Square 9 Can Help
Square 9 Softworks is an industry-leading provider of an AI-powered intelligent document processing platform that takes the paper out of receivables and makes it easier to get things done. By combining the best in enterprise content management, like workflow tools for automated payment reminders, and capture technology like OCR and web forms that save time and reduce days’ sales outstanding, Square 9 offers intuitive, scalable solutions that will empower your organization for years to come.