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Top 10 Accounts Receivable Tips to Get Paid Faster

Top 10 Accounts Receivable Tips to Get Paid Faster

 Accounts Receivable (AR) Managers often have to perform a juggling act regarding their work. From managing teams, building efficient processes and optimising the business’ cash flow – there are a lot of responsibilities that come with the role. All these aspects of the job must work in sync to deliver the business objective of getting paid on time.

In our recently concluded webinar, “Top 10 Tips Every Accounts Receivable Manager Should Know to Get Paid Faster” we invited Susan Jersky, AR Manager at The Better Food Distribution Co., to speak with Arjun (AJ) Singh, co-founder and CEO ezyCollect. In the session, Susan shared her insights on best practices to help AR Managers and teams work efficiently.

Here are the key takeaways from the session.

Top 10 Accounts Receivable tips to get you paid faster

Managing your AR Team

While everyone can implement best practice methodology, and there’s now more good technology available, the key to success in accounts receivable management is still the human factor that orchestrates efficiencies. Based on Susan’s experience, the AR Manager’s responsibility is to create a positive and uplifting environment for her staff.

1. Focus on reward and recognition 

Recognising your team’s efforts and hard work is one of the most proven ways to motivate staff. Benchmarking your staff’s salaries according to their skill is one way to do this, but you can use many other incentives and methods. 

In the webinar, one of the tools discussed is time, which can come as giving time back to your staff if they completed their tasks for the week earlier than expected or achieved a great goal. 

2. Focus on strengths and improve weaknesses

Everyone has a different way of working. Knowing your team’s strengths, weaknesses, and quirks helps minimise conflict and encourage productivity. When you got processes in place and utilise accounts receivable technology to back them, it’s easier to focus on the people to improve their skills and leverage their strengths to ensure an efficient, high-performing team.

3. Lead by example

Leading by example is an effective way of managing people. But it’s not just about setting a good example in doing good work but also encouraging a rich and meaningful life. Achieving work-life balance is crucial to happy and healthy individuals and lays the groundwork for productive teams.

Tips for Enhanced Productivity

Many consider Accounts Receivable management as repetitive work of sending invoices and chasing payments. However, as technology like accounts receivable automation becomes more prevalent, the role of the AR Manager and staff is also changing. Here are just a few tips to help your team focus on constant improvement and how technology can provide you with accurate information to achieve that.

4. Customise client communications

Understanding clients becomes crucial as accounts receivable teams move towards a more advisory role. Customising your communication is vital to help you gain a deeper understanding of your client’s unique needs. While, at the surface, this may seem time-consuming, leveraging technology can enable your team to create customised communications much more efficiently.

5. Consistent messages to clients

Aside from customising communications, your message must be consistent to ensure understanding and avoid any future disputes between you and your clients. Online credit application forms can be a great way to ensure this right from the beginning. When you’ve got the whole process in place from onboarding, you can start instilling the information and the terms and conditions by which you wish to conduct business with your customers. This message is constantly reinforced to any payment reminders, ensuring that there are no surprises for customers in how you do business.

Related blog post: What should your business include in a B2B Credit Application form?

6. The entire company focus on data integrity and process

Keeping data up-to-date and ensuring its integrity should be a key focus in accounts receivable management. The correct data can enhance communication with clients and produce better results. However, it’s not only the AR team that needs to be concerned about client information and data. It’s the whole company – from sales to admin to management. 

An efficient client onboarding system can help eliminate data entry errors and check for information accuracy. This can significantly save the time and effort it takes for your team to rectify incorrect information and prevent future disputes with your clients.

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Tips for Better Cash Flow

The key to a healthy cash flow starts with building good customer relationships. Good communication and empathising with your clients give you a clearer picture of issues and help you provide a feasible solution that helps them improve their payment behaviour.

7. Provide multiple payment options

Getting paid accurately and on time is your goal in accounts receivable, so it’s essential to make this step easy. When you provide multiple ways for clients to pay their invoices, you also give them the flexibility to pay you in the way that they can.

On top of this, leveraging 24/7 online payment platforms also make payment transactions more convenient for your customers. Providing this option to pay whenever they want removes another hindrance in receiving payments on time. With a payment platform, your clients also can download their invoices and statements, saving your team a lot of time from answering invoice copy requests.

8. Client onboarding and risk mitigation

Risk management is one of the most critical steps to improving cash flow. According to Susan, she has seen a decrease in their defaults by adapting good risk management practices. With the help of digital credit applications and risk management tools, you can protect your business from bad debts and minimise future problems in your accounts receivable collections. 

Assessing and monitoring credit risk also allows you to set up credit terms based on reliable information, giving you that right balance to maintain good client relationships whilst protecting your business from unnecessary risks. An excellent example of this is if a customer has slightly higher risk levels, you can provide a direct debit option. Providing this alternative allows you to manage your risk without rejecting a customer outright.

Related blog post: How an enhaced credit application process can protect your business from bad debts

9. No charge CC if possible

Credit card payments are just one of the many options your customers can choose from, but credit card fees often scare businesses away from offering this payment method. While you can always charge your customers for the fees, you can also consider absorbing the fees. In the webinar, Susan shared her perspective on credit card payments.

“The 1% that we are paying on a credit card is pretty much nothing compared to the collection efforts and the late payments that we receive,” said Susan adding that this is especially true for their smaller customers who often don’t pay on time.

With more and more customers looking into credit cards to make their payments, exploring the option of not charging credit card fees can be beneficial when measured against other costs involved in the AR collection process.

10. Communicate with problematic, late paying clients

While automation can provide you with the speed to collect payments, the human touch is still important to effectively get paid – especially from delinquent customers. A considerable part of automation in communications is to sort out customers that need more attention. Most customers would want to maintain a good relationship with suppliers, but certain situations might’ve happened that affected their ability to pay on time. 

Clients appreciate it when you talk to them personally and discuss the problem. Having that direct information from your clients gives you more control over the situation instead of relentlessly chasing them without any concrete plan to solve the problem.

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Digital B2B Payments Show Promise But Still Face Hurdles to Widespread Use

Digital B2B Payments Show Promise But Still Face Hurdles to Widespread Use

Both businesses and customers are reaping the benefits of improved payment processes through fintech innovations. A good example of this is digital B2B payment platforms that are now gaining popularity worldwide among businesses to efficiently collect payments from their customers. 

Fintech paves the way for better transparency, especially around B2B payments. The technology promises convenience, is lightning fast, and provides many payment options. Despite these benefits of digital payment platforms, many businesses still do not use them to collect payments from other businesses.

The rise of digital payments in B2B transactions

In 2018, paper checks dominated the payments landscape. ACH payments came in second, followed by wire transfers and card payments.

But everything changed in 2020: The Covid-19 pandemic forced banks to reimagine their operations, and governments mandated business teams to work from home. As a result, unprocessed paper checks piled up at banks. Businesses started looking for ways to optimise B2B payments for the new normal.

Many small and medium-sized enterprises started using fintech solutions to automate their accounts receivablesand corporations began leveraging managed treasury services for operational excellence.

Despite the growing popularity of digital B2B payment platforms, the question remains -could they address inefficiencies inherent to paper checks? If so, do digital payments have the potential to become the preferred payment method for businesses?

Why should every business seriously consider enabling B2B payments?

1. Cost-effective payments

Even before the pandemic, businesses worldwide are aware of the impact of digital payments in driving operational efficiencies.  In 2015, Deloitte conducted a study of 150 organisations in Australia and New Zealand. The respondents said that they find digital payments cheaper, faster and more convenient than traditional payments.

The study reported that digital payments could be at least 70 percent more cost-effective than traditional purchase order processes. Digital payments improved cash flow for most surveyed (73 percent) organisations. Around 68 percent of the surveyed organisations reported that process automation reduced manual administration.

With these numbers, it’s no surprise that more and more businesses are have now moved towards digital payments.

2. More payment methods

Aside from cost savings and improved productivity, the technology also allows for more efficient processing of various payment methods.

Take, for instance, credit card payments. Traditional payment mechanisms make credit card payments a challenge for B2B due to the nature of transactions and processes. But with digital payment platforms, credit card payments are logistically manageable – almost as efficient as transactions on the B2C space.

This capability for other forms of payment is the most apparent benefit of B2B digital payment platforms. Still, other benefits make it a powerful tool to improve the efficiency of entire business processes. 

3. Integration to accounts receivable systems

Most digital payment platforms are built within accounts receivable software that automate billing, collections and invoicing. Many even automatically send out late payment notices to debtors. This centralised system from order to cash makes it easy for businesses to manage their receivables and ultimately leads to a healthier cash flow. 

4. Modernises payments collections and reporting

In terms of practicality, businesses simply do not have to worry about lost or damaged checks with digital payment platforms. Advanced platforms store payment data that businesses can use to improve their reporting process. Flawless data reporting paves the way for better decision-making.

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So what’s preventing digital payments from going mainstream?

Many businesses realise the benefits of digital payment platforms and are working on plans to redefine their B2B accounts receivables with digital payments. However, the mass adoption of digital payments will take time.

Many businesses, especially those offering healthcare and legal services, are unwilling to adopt digital payments due to inherent security issues. Several businesses still rely on paper checks and may not want to switch to digital payments as their vendors and partners resist change.

Many businesses have found a middle ground. They use digital systems to process paper checks. These businesses still have to annotate wire transfers and ACH payments manually.

What do digital platforms need to do to promote digital payments?

Digital payment platforms need to address security concerns (such as information theft and online fraud) associated with digital payments. Measures such as two-factor authentication and SSL encryption provide additional levels of security that can ensure safe transactions. 

Digital B2B payment platforms must also adopt automation designed to transfer non-digital payments – which are still standard payment methods for most businesses – into automated payment solutions.

Conclusion

AR innovations have paved the way for accessible digital payments in B2B. The technology behind digital payments resolves the pain points often found in traditional payment methods. However, businesses must also take into consideration the security and flexibility of the platform they choose to maximise the benefits of digital payments.

Interested to see how a digital payment platform can get you paid faster? Talk to us today to get started with Simplypaid.

The CFO’s Guide To Accounts Receivables Automation

The CFO’s Guide To Accounts Receivables Automation

Accounts receivables (AR) are a critical component of every business. The AR team is responsible for sending out invoices, billing customers, processing payments, and following up on payments due. Your business’s cash flow and, consequently, productivity and growth hinges on the efficiency of the accounts receivable activities. 

Many CFOs strategically deploy AR automation to streamline invoicing, payment processing, acceptance, and collections management. It is imperative for any business that the above activities work in harmony to ensure a healthy cash flow. AR automation is seen as the solution to realise this objective.

In this quick guide, we’ll look at how AR automation can improve different areas in your business by streamlining the efficiency of how you collect payments. We’ll also touch on the problems that often arise from manual accounts receivable processes and why research suggests switching to automation could solve most of these challenges.

The challenges of manual AR processes

Despite the growing demand for AR automation, many businesses still rely on manual AR processes. A 2017 Small Business Trends study showed that about 84% of companies use manual processes such as Excel and spreadsheets. A more recent 2021 report reveals that manual AR processes are still prevalent across industries.

Today’s digital environment calls for fast turnaround times, convenient transactions and customised experiences. Without automation, it can be a challenge to stay on top of your receivables. Here are just a few issues that can affect your AR processes with manual workflows.

1. Inefficient payment acceptance

Manual processes slow down collection processes significantly. Companies across industries experience longer collection cycles when they rely on manual AR processes. The PYMNTS research shows that, on average, firms that use manual methods take 25.3 days to follow up on payments. Firms that have not automated their AR processes have 18 percent longer collection terms than businesses that have adopted AR automation.

2. Poor cashflow

Delayed payments are typically the top cause of poor cash flow for small to midsize businesses. An earlier survey in Australia suggests that 90 percent of small businesses face cash flow issues and go broke due to delayed payments. The 2020 MYOB Business Monitor found that 38 percent of Australian SMEs (small to medium-sized enterprises) feel financially stressed due to late payments, and 42 percent are concerned about cash flow.

3. Higher administrative costs

In addition to poor cash flow, businesses incur increased administrative costs linked to debt collection that involves:

  • Collection calls
  • Reminder letters
  • Receivables emails
  • Human resources dedicated to late account collection

4. Impacts productivity

A survey of eleven countries, including the United States, by a consulting firm, Plum, found that manually following up on payments is highly time-consuming. On average, 15 workdays are lost each year in chasing after late payments.

5. Impacts innovation and growth

According to research, 7.5 per cent of invoices are written off ultimately as bad debt. A 3-day delay in invoice due can take away $115,000 from the working capital with a $10 million yearly turnover ($10 million divided by 261 working days). With cash locked up in delayed payments, the potential working capital is frozen – putting financial brakes on innovation investment and scaling up production.

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Improve payment collections with AR Automation

A recent industry survey found that one of the significant barriers to following up on late payments is the lack of dedicated resources. Businesses also report a lack of personnel and staff time as common barriers to payment collection. A significant proportion of companies find it difficult to broach the payment issue with their clients as they fear doing so could harm their future relationships.

With digital processes for invoicing, AR automation effectively handles labour-intensive AR processes such as deductions while accurately capturing and prioritising collections efforts. Integration with an online payment platform also streamlines the process, with a payment write-back that syncs to your ERP while providing a seamless experience to your customers. 

AR automation brings convenience for both you and your clients, making it an essential tool in today’s fast-paced and evolving business landscape.

AR automation by the numbers

According to research, businesses that use AR technologies experience a 23 per cent improvement in payment collections compared to firms that use manual methods.

  • 75% of firms reported that AR automation enabled them to offer superior customer experiences.
  • 87% of businesses that employed AR automation observed improvements in their overall payment process speed
  • 79% of automation adopters agree that it improves team efficiency
  • 89% of firms experience faster processes.

The numbers don’t lie. AR automation brings many benefits that impact overall business health – minimising your exposure to risks brought about by manual processes.

Talk to us today to learn more about how AR automation can help your business. Or watch a free demo to see ezyCollect’s AR automation platform in action.

Accounts Receivable Turnover Ratio: Definition, Formula & Examples

Accounts Receivable Turnover Ratio: Definition, Formula & Examples

Accounts Receivable Turnover Ratio is a key metric for businesses. A good score is essential to attract investors if your business seeks credit. Even if growth funding is not a priority currently, this ratio is important to understand your business’ efficiency in collecting outstanding credits.

Accounts Receivable Turnover Ratio in Detail

Also referred to as Receivables Turnover, the Accounts Receivable Turnover Ratio specifies the count of credit collections per year by a business. If you have customer accounts with outstanding payments, the turnover ratio tells you how successful you have collected such payments.

Payment terms may be different for different businesses. For example, some businesses may require payment before the delivery of a service or product. Some businesses may require payment after a service or product delivery.

For example, Business A may offer a credit of 30 days starting a day after invoice generation for a product/ service delivered. Business B may necessitate bill payment 30 days before a service/ product is delivered.

Business B has better protection against payment defaults as it provides its product/ service only after bill fulfilment. On the other hand, Business A faces the risk of bad debts – some customers may pay late while some may shut down, making the outstanding credit a loss.

Regardless of the payment terms, this ratio reveals the predictability of cash flow into a business. It also helps you understand if improved strategies need to be implemented for better credit risk management.

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Calculation of Accounts Receivable Turnover Ratio

Businesses calculate the value of the Accounts Receivable Turnover Ratio by dividing the net sales from credit by the average value of accounts receivables. Businesses calculate these values over a given time.

To compute the accounts receivable ratio, first, you need to calculate the total of the accounts receivables at the beginning and the end of the given period. Then, divide this value by 2 to get the average accounts receivables for this specific period. Divide the net credit by this value to get the required ratio.

Step A: Obtain the average accounts receivables for the specific period.

Step B: Divide the net credit sales over the period by the above average.

Accounts Receivable Turnover Ratio = (Net Yearly Credit Sales) / (Average of Annual Accounts Receivables)

Accounts Receivable Turnover Ratio Example

As an example, Business A records accounts receivables of $1, 000, 000 at the start of a year. At the end of the year, its accounts receivables are $1, 500, 000. The company records net credit sales of $10 million over the year.

The Accounts Receivables Turnover Ratio for the company:

Average accounts receivables = ($1, 000, 000 + $1, 500, 000)/ 2 = ($2, 500, 000)/ 2 = $1, 250, 000

Accounts Receivables Turnover Ratio = $ 10, 000, 000/ $1, 250, 000= 8

Business A collected its credit accounts 8 times in that specific year.

Significance of Accounts Receivable Turnover Ratio

This Accounts Receivables Turnover Ratio indicates your business’s ability to collect its credit. The higher the ratio, the more efficient your company is at credit collections. 

Your analysts understand how quickly and efficiently your business can collect outstanding payments based on the ratio. It’s important data that can help you make better decisions in improving your processes or upgrading your accounts receivable automation software. This ratio gives your analysts a clear picture of your business’s financial stability and is vital for planning business growth.

The turnover ratio also informs if you have to review your credit policies. A poor ratio could signify that you need to analyze and reframe your payment terms and credit application policies to invite more cash flow into the business.

Improving your accounts receivable ratio will directly impact your cash flow.

In Conclusion

Continuous monitoring of your Accounts Receivable Turnover Ratio tells how financially good your business is. Ensure that this efficiency ratio stays high so that your business prospects of growth are good.

Looking for an efficient way to improve your Accounts Receivable Turnover Ratio? Book a free demo of ezyCollect and learn how AR automation can work for you.

Top 5 B2B Payment Hacks for Digitising Your Business in the New Year

Top 5 B2B Payment Hacks for Digitising Your Business in the New Year

Digitization is one of the priorities for businesses in today’s times, and why shouldn’t it be? The trend of digitization isn’t just about embracing cutting-edge technology. It’s also proving to be more effective for businesses that want to improve productivity and efficiency. In terms of payments, more and more companies are turning to digital payments because of the following benefits:

  • Digital payments offer more security as gateways armed with various security features that make digital transactions safe to process.
  • B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
  • It’s easy to track digital transactions as payment details are safely stored in easy-to-access databases – reducing confusion and ambiguity.
  • There are numerous digital payment options available now, and offering all of them to customers can result in faster payments and improved cash flow.
  • Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.

So, now that you’re aware of the benefits of payment digitization, let’s get into the top 5 B2B payments hacks that will allow you to digitize your business in 2022.

1. Automate AP and AR processes.

There was once a time when businesses used to rely on manual accounts receivable (AR) and accounts payable (AP) processes. However, manual processes are inefficient, especially when compared to automated AR processes. Today, slowly and steadily, businesses are embracing AR automation. The automation of AR processes leads to a decrease in the time necessary for following up on overdue payments. Most B2B companies are automating AR processes for accelerating operations and managing their cash flows more efficiently.

Letting go of legacy processes like physical signatures and paper checks can be hard for AP processes. However, these processes add to the workload of AP teams and lead to lags in payments. Through AP automation, businesses can accelerate payment timelines and make and deliver invoices rapidly. Going digital can increase the likelihood of your business getting paid on time and improve customer experience regarding transactions.

SMBs are turning to digitization, but the transition is quite challenging. According to a survey, the invoices of more than 60% of SMBs feature late payments. The same study also revealed that 16% of SMBs report receiving late payments by over a month. To improve these statistics, more and more SMBs are turning to AR automation tools that can seamlessly sync with their existing ERPs (ERPs such as MYOB, XERO, Acumatica, Netsuite and Sage 300)

2. Reduce reliance on legacy processes such as paper cheques

Paper checks and other manual legacy processes played essential roles for businesses in the past. However, due to the inefficiencies of these processes, their popularity has suffered over the last two decades. In 2022, the trend continued, with commercial cheques dipping even further than before. However, despite their dwindling popularity, 91% of the leaders in the fintech sector revealed a startling fact – organizations are still being paid with cheques by customers.

This startling fact has a lot to do with the reluctance or difficulties businesses face to move away from legacy systems and operations that are complex and unfriendly. However, since the emergence of COVID-19 as a pandemic, many reluctant companies have had no option but to switch to electronic transactions and real-time payments. This switch has allowed these businesses to survive during the pandemic. Not making the switch may have led to disaster at a time when the economic upheaval caused by the pandemic has been immense.

In 2020, a study conducted by Mastercard revealed that 68% of SMBs lowered their use of paper checks and cash because they had to. The reason was simple – the deposits were time-consuming. The AFP 2020 Survey reported that almost 60% of practitioners would want to shift from cheques to digital B2B payments because of the benefits involved.

3. Switch to smart payments

Electronic payments are attractive for several reasons. However, despite the apparent advantages they offer over traditional payment methods, many businesses hesitate to make a move. This hesitancy stems from complications from switching to payment methods like automated clearing houses or ACH. Most complications involve the separate traversal of remittance information such as amounts, payment methods, and invoice numbers.

Due to the separate traversal of this information, suppliers can’t immediately view the charges associated. Most suppliers are reliant on accounts receivable specialists. Even for the specialists, it’s a hard job to match the payments with the correct invoices, as they have to undertake the matching process manually.

Thankfully, ‘smart’ payments can do away with these complications. Smart payments are a result of the emergence of remote and contactless payments. ‘Smart’ payments, can increase the volume of electronic payments, and the most significant advantage of this payment system is that it doesn’t add to the manual workload. Simply put, when money changes hands under smart payments, the data also changes hands simultaneously, and the money is applied automatically to the right invoice.

Let’s take a look at some more benefits that smart payments have to offer:

  • Smart payments are entirely automated, and they eliminate the need to set payment reminders.
  • Transactions are rapid, and there is no requirement for cash handling.
  • Smart payments are among the safest and secure payment methods in today’s times.
  • There are no extra processing costs involved for businesses and their clients.
  • Adopting smart payments delivers an improved customer experience.
  • Smart payments also lead to a significant improvement in operational efficiency.

4. Integrate AI and blockchain

In recent years, the e-commerce industry has seen the introduction of machine learning and artificial intelligence (AI). In 2022 and beyond, the B2B payments sector is also set to welcome them. AI technologies can be incredibly effective in accelerating processes associated with payments. These technologies can also reduce the workload of AP teams. Machine learning algorithms can also provide additional functions, such as assessing accounting data, suggestions for speeding up the processes related to payments, and learning trends.

The B2B payments sector is also witnessing the emergence of blockchain – the technology powering cryptocurrencies. If you’re new to blockchain, here’s what it means – it’s a distributed database shared among a computer network’s nodes. Information in a blockchain is stored in a digital format electronically. Blockchains maintain records of transactions that are decentralized and secure. The following are some of the advantages that blockchain payment systems would bring to B2B businesses:

Increased transaction safety: Blockchain transactions are significantly faster than conventional centralized system-driven transactions. As a result, hackers have very little time intervening in the transactions and stealing either money or transactional information. Also, every blockchain journal entry becomes irrefutable post-verification, and no one can change the entries. Blockchain transactions also involve the use of two security keys.

Fewer intermediaries: Major intermediaries often dictate the terms of financial transactions. For example, a transaction under the conventional system would involve intermediaries like the issuer, the exchange, the payment gateway, and the acquirer. All the intermediaries charge separately for their services, which increases transaction costs and makes the transaction time-consuming. However, blockchain-based payment systems don’t require intermediaries. When such a system is employed, buyers and sellers can participate in direct fund transfers without bearing intermediary costs.

High-speed cross border transactions: Cross border transactions typically take 1 – 5 days under the conventional financial system. However, blockchain-driven cross border transactions only take a few hours. In the future, we can expect even greater time savings.

5. Support as many payment methods as possible

The increasing number of payment methods leads to different businesses having different preferences. While some companies may prefer virtual credit card payments, others may be more inclined to buy now, pay later options. That’s why your business needs to support as many payment methods as possible. Flexibility in terms of payment will allow you to do business quickly, leading to greater customer retention and loyalty.

Additionally, innovative payment methods drive transaction costs down, and transaction speeds up. The best thing is that the costs are reduced for your customers. Sure, your business can still survive for the time being based on old-school payment methods. However, when you consider the fact that an ever-increasing number of companies are opting for B2B payments automation options, you’ve got to make the transition sooner or later.

So, there you have it – the top 5 B2B payment hacks that will allow your business to embrace digitization and all its benefits in not just 2022 but the years ahead as well. Of course, putting these hacks into practice will take you some time, and most likely, you won’t be able to do everything at once. However, it’s crucial that you start adopting these hacks to make business smoother for you and your clients.

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

The O2C cycle is often riddled with manual steps that can cause a lot of friction in between- and frustration for both the business and customers. This dramatically affects your receivables collection and, eventually, the health of your cash flow.

In our recently concluded webinar, “The 10 Gifts of Accelerated Cash Flow”, we invited Amanda Lee, Founder and Receivables Management Advisor at The Retriever, to speak with  Arjun (AJ) Singh, Co-Founder and CEO ezyCollect, to discuss how you can take advantage of a streamlined and optimised O2C process through accounts receivable automation, creating a seamless cycle that not only ensures you get payments efficiently but also improve your relationship with customers. Here are the key takeaways from the session.

3 critical areas of focus in the O2C cycle for accelerated cash flow

1. Best practice credit approval

Extending trade credit is something that many businesses do manually, and this can cause a lot of issues that can lead to bad debts – affecting your cash flow in the long run. Adapting an automated and data-driven process delivers efficiencies that are beneficial for both you and your customers.

First of which is a more reliable credit check. Unlike manual application processes that primarily rely on trade references given by the customer, an online credit application system integrates credit risk scores from trade reporting agencies so you can get data-driven insights and make better decisions before onboarding customers and extending credit. Having this data at your fingertips gives you that professional knowledge without much effort, and you’ll be able to manage risk right from day one, making that goal of accelerated cash flow much easier.

Another benefit of online credit applications is a better onboarding experience. First impressions last, as the adage goes, and that couldn’t be farther from the truth in business relationships. Onboarding customers in a disorganised, time-consuming process that are prone to error reflects an unprofessional image on your part – inadvertently sending the message to your customers that they can cut corners as you do. By digitising a credit application, you create a streamlined and automated process that not only benefits your operational efficiency but also means you mean business, and customers need to be in that same level of credibility too.

2. Humanised automation

Humanised automation seems contradictory, but part of reducing your overdue accounts hinges on this balancing act of human connection and automation. Automation creates communication efficiencies in accounts receivables, paving the way for a more personal approach to customers that need it the most.

With an automated communication workflow, you don’t have to physically communicate with everyone, but you’ll be able to focus on customers that need more. An AR automation platform tells you who those customers are through consolidated credit and risk data, providing you with that opportunity to connect and build relationships. To truly understand why your customers’ payment behaviour changed, there has to be human interaction involved. You can work with them to resolve blockers preventing them from paying you on time. It’s about continuing that cycle to sell, and having a receivables ledger that’s 100% collected each month and clear, persistent, and personalised communication with your customers is going to help you achieve that.

3. Frictionless payments

Getting your payment on time is the goal of an optimised O2C process. It is crucial then to make this part of the O2C cycle as pain-free as possible, allowing your customers to pay at a time convenient to them through various payment methods that they can choose from. 

An online payment platform is designed to do just that, not only as a portal where customers can pay you but also includes their statements, so they no longer need to contact you, especially when making the payment after office hours – all the information they need is readily available to them. By creating convenient pathways for payment, you can get paid easily and quickly.

The gifts of accelerated cash flow

As we’ve learned thus far, an accelerated cash flow is very much possible thanks to accounts receivable automation. While an improved cash flow is the end goal of automation, optimising the O2C process also comes with its benefits.

1. Greater business intelligence

AR automation gives you access to data and gives you the insights to make better decisions that can affect the health of your business.

2. Business continuity and data integrity

AR automation resolves cash flow issues, as we now know. With an improved cash flow, you’ll be able to run and grow your business the way you want to.

3. Sharpen your focus

Automation gets all the repetitive tasks done, so you can hone in on strategy-related tasks that further your business.

4. Shore up customer trust

Automation ensures consistency in processes and clears communication pathways – both of which allow you to build trust with your customers and, in turn, foster customer loyalty and growth.

5. Customer Perception

Digital, automated processes are now the norm and what your customers expect. Adapting automation in your business creates a professional image and aids in brand equity.

6. Lowered DSO

Automation streamlines your O2C cycle, removing any friction between processes so you can get paid promptly.

7. Error reduction

AR automation minimises the need for manual entries, reducing errors. Its capability to integrate with your ERP also means there’s no double-handling of data that can lead to more problems in your accounting.

8. Time savings

Leveraging an account receivable platform removes the need for manual processes, saving your staff tons of time. The amount of time saved can then be used to focus on more high-value work that can grow the business.

9. Gain real-time visibility

With an AR automation platform, you can get a live view of credit risk scores to be confident in making decisions based on current and accurate data.

10. Enhance efficiency across the business

While AR automation improves the collections processes of your receivables, this also translates into improvements across business functions and teams.

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