Collect Invoices Faster: The Biggest Challenge for CFO’s
Collections activities are part of every business. As a trade risk professional, we speak with many CFO’s about their challenges as it relates to managing their receivables, and time and time again, the most common concern most CFO’s share is the inability to collect outstanding invoices within a reasonable amount of time. Most companies are subject to the same vicious cycle, where outstanding invoices are paid many days beyond the terms that were originally agreed upon. When customers pay late, it limits access cash, and sometimes the basic operational costs and ongoing funding needs of the business cannot be met.
A recent poll on LinkedIn asked company executives in the New York, New Jersey, Pennsylvania, & Delaware areas to indicate what their biggest challenges were as it relates to managing their accounts receivable. A sampling of 350 CFO’s reported that reducing the number of days outstanding (DSO) was the biggest challenge for them. In other words, they all want to get paid more quickly.
The results of the poll confirmed that not only were companies finding it challenging reducing their DSO, it was also clear that they do not have the right systems in place that could help them get paid sooner. The key to successfully reducing DSO is having access to systems that communicate with debtors in a non-alienating way at the first sign of delinquency. Delinquent customers must be contacted early in the game, utilizing multiple communication channels simultaneously, such as phone calls, direct mail, email, and fax. Sometimes in-person visits are necessary to send the right message. The key to success in collecting funds more quickly is outsourcing these functions to a third party collections agency so employees can concentrate on the core of the business while leaving the collections work to the professionals.
Take your company for example. Imagine if you had the ability to log in to a secure website and enter the names of your debtors that are currently delinquent. How valuable would be if a series of phone calls were made and reminder letters sent to your clients on your behalf, allowing you the ability to jump start the process of recovering your funds early in the process, all without the headache of managing the effort yourself. Imagine having access to status reports online, within a password protected website, summarizing the number of phone calls made, letters mailed on your behalf, and results of each contact. Think about how your cash flow would improve as checks arrive in your mailbox continuously while all of the tedious follow up work is done for you at a fraction of the cost of trying to do it by yourself. Utilizing such a system for your collections process can greatly improve your cash flow situation, significantly reduce your costs, and free up your staff to do other revenue producing jobs within your organization.
Have a question about collections? Feel free to call us at 1-844-315-4985 or contact us directly by using the form to the right.