Before addressing the techniques that can be used to accelerate the collection of cash receipts, it is important to understand the reasoning behind this approach.
The first step is to measure the DSO and to compare it to your “official” payment terms. If there is a big difference, it is time to remedy the situation or you risk jeopardising the viability of your company.
Moreover, the average number of days needed to get an invoice paid is an indicator of operational efficiency.
Once you have calculated your DSO, it is indispensable to carry out a closer analysis, which will allow you to identify the possible lines of action. It is therefore necessary to group and segment your customer base according to the DSO and then to find out the reasons for the late payments.
Depending on the types of late payment and your collection process, it will be necessary to define the scenarios, preferably automated, to be set up as well as any alerts.
You can also programme different scenarios according to the segments you have identified. Standard letters can also be drawn up for maximum effectiveness, thereby saving time in the customer reminder process.
In order to be as effective as possible, it is indispensable to have a centralised record of the entire customer file (reminders, invoice and payment history, disputes, contacts, solvency…) This step enables you to prepare the telephone reminder phase which may be necessary and integrated in your collection scenarios.
From this stage on, it is up to the risk manager, credit manager or debt recovery officer to intervene to obtain a commitment from the customer. Direct contacts are preferable to achieve an amicable settlement.
To accelerate the collection of cash receipts and reduce your DSO, it is necessary to adopt a solution that enables you to bypass paper in your exchanges and therefore reduce your workflow times and increase effectiveness. A debt collection software package will also enable you to set up all the scenarios necessary to your debt collection process, from the first reminder through to the final demand.
Source : Iconfinder.com
photo credit: yostD7000 via photopin cc
Why accelerate the collection of receipts?
The first reason for accelerating cash receipts is unquestionably to improve the company’s cash flow. This lends the company more credibility and enables it to manage its business serenely and pay its way. To improve the DSO (Days Sales Outstanding), it is indispensable to involve all the different players in the settlement chain, starting with the sales staff and going right up to the Administrative and Financial Manager.1. Identify the problem
The first step is to measure the DSO and to compare it to your “official” payment terms. If there is a big difference, it is time to remedy the situation or you risk jeopardising the viability of your company.
Moreover, the average number of days needed to get an invoice paid is an indicator of operational efficiency.
2. Structure the approach to reminders for unpaid bills
Once you have calculated your DSO, it is indispensable to carry out a closer analysis, which will allow you to identify the possible lines of action. It is therefore necessary to group and segment your customer base according to the DSO and then to find out the reasons for the late payments.
Depending on the types of late payment and your collection process, it will be necessary to define the scenarios, preferably automated, to be set up as well as any alerts.
You can also programme different scenarios according to the segments you have identified. Standard letters can also be drawn up for maximum effectiveness, thereby saving time in the customer reminder process.
3. Ensure the customer reminder process and telephone reminders are under control
In order to be as effective as possible, it is indispensable to have a centralised record of the entire customer file (reminders, invoice and payment history, disputes, contacts, solvency…) This step enables you to prepare the telephone reminder phase which may be necessary and integrated in your collection scenarios.
From this stage on, it is up to the risk manager, credit manager or debt recovery officer to intervene to obtain a commitment from the customer. Direct contacts are preferable to achieve an amicable settlement.
4. Remove the paper from the process
To accelerate the collection of cash receipts and reduce your DSO, it is necessary to adopt a solution that enables you to bypass paper in your exchanges and therefore reduce your workflow times and increase effectiveness. A debt collection software package will also enable you to set up all the scenarios necessary to your debt collection process, from the first reminder through to the final demand.
Source : Iconfinder.com
photo credit: yostD7000 via photopin cc 
