For business to be successful, profit is one of the measures, in fact, the ultimate measure and a clear indicator of how well your business is doing. Profitability is, to many, a key factor of understanding what a business does and why. That does not mean, other objectives like revenue, customer satisfaction, efficiency and many more are not important. Profit continues to be the measure of the return on your investment.
Profit being the bottom line of any business is not created by just pricing mark-up, it has to do with enriching the customer’s experience throughout the life cycle in dealing with the company. It is obvious that the key starting point is to make the sale first and build business relationships by focusing a great deal of attention towards delivery and customer service techniques. However, there is one universal truth, “ business cannot realize its revenue or profits without collecting dues from the customers “.
This brings a very important dimension of ensuring that additional focus on Accounts Receivables or reducing Days Sales Outstanding. It is one thing to have a good Accounts Receivable balance that can be recognized as a business asset, but, it is another thing entirely to actually have that cash on hand in order to utilize it for the business.
Companies, many times fall into trap where the Account Receivable gets into rough shape. Unfortunately, many customers, we are dependent on long term business are in the overdue list. It is obvious to see a reactive approach where the accounts and sales teams collaborate to their best abilities to focus on customers. However, with the extra focus, one need to have creative and tactful ways to improve Receivables without ruining all those critical relationships.
Here are few areas one can focus to improve accounts receivables process which can directly lead to improving your bottom line
Have customer payment history to determine credit limits. Two customers with same credit score, however, one paying on time and other with delayed payments track record cannot be enjoying same credit limits
- Be proactive in your communication with customers. A structured and timely approach to remind customer on their dues will ensure maintaining healthy customer relationships and you can continue to bank on future business
- Ensure Accounts department and Sales team collaborate well and are on same page while engaging with customers
- Sending accurate invoice to the right person in the customer organization is important, however, it is equally important to attach supporting documents that enables processing of the invoice
- Periodic reconciliation of invoices and payments received will maintain the clean record with the customer and facilitate heathy relationship.
- Define ownership within your organization to resolve invoice and payment related disputes.
In today’s information era, one can embrace technology as a tool to alleviate some of the challenges listed above. Automation of the Accounts Receivable process will provide dashboards to quickly assess the status of your receivables, enable collaboration to follow-up on key tasks, keep a track on communication, automate the delivery of payment reminders emails, schedule follow-up calls for collections, incorporate payment history as part of customer credit approval process and much more to eliminate many of your time consuming activities ( such as updating spreadsheets, handling inconsistent data points ) so you have more time to work with customers and grow business.
Accounts Receivable Automation can be easily done using Kapittx, a leading SaaS platform to reduce your Days Sales Outstanding. Request for a demo now and watch how Kapittx will speed up the payments and improve the order to cash cycle. By unlocking the cash in business will significantly help you grow revenue and improve profits.
Kumar Karpe Co-Founder and CEO, Kapittx