Your company is taking off and you’ve suddenly moved from plucky startup to established business. Everything is going well, but you’re having trouble maintaining a regular cash flow because your accounts receivable operation is slow and inefficient.
It may be time to automate your processes. How do you know, though? What are the telltale signs that an A/R solution is the right answer?
These are some of the questions you’ll need to ask yourself.
How easy is it to calculate DSO?
Days sales outstanding (DSO) is the first step to measuring your A/R department:
How long is it taking to get paid?
Of course, to make this determination, you need to be able to calculate the metric first. This should be a simple, repeatable process. Trying to do this using a spreadsheet formula probably isn’t going to get the job done, nor give you a full snapshot.
Automating this process allows you to easily identify what payments you should expect soon, which customers are late and which need to be nudged. It will better forecast cash flow, allowing you to make informed business decisions, and create a chasing and dunning strategy.
This process should be simple to do. By hand, it’s a chore. When automated, it’s pretty simple.
How smart is your A/R operation?
Determining DSO leads to this. What actionable data are you getting from your billing process? If you’re not using an automated solution, you’re certainly not maximizing it.
Automation provides real-time information that creates data-driven decisions. Account executives have data to potentially upsell customers in good standing, Customer Engagement Managers have a better idea of how satisfied users are and Marketing executives have firm data on the success - or lack thereof - of campaigns.
Automation provides these kinds of insights. It’s a permanent provider of customer insights that goes far beyond just making sure bills are paid on time.
Are you prepared for growth?
Growth is great. Being unable to handle growth is bad and could be disastrous and potentially damaging to your business.
All parts of an organization must adapt should the need to scale occur and A/R is no different. An automation solution solves that headache immediately, allowing business owners to easily track orders, communications and performance. They’re easily scalable as well should your growth become permanent.
How long is it taking to fulfill orders?
OK, an order comes in and then what happens? Does it have to be processed by multiple people? Is it done manually? How long does it take? How many errors are there?
Automation takes all the guesswork out of this process and ensures that invoices are delivered accurately and on time. It also helps businesses to offer more complex pricing options, like tiered rates, discounts for volume purchases, different taxes and more.
Do you experience churn?
If your business has a subscription component or regular billing, you’re familiar with churn and how important it is to reduce it. Churn rate is a key metric for many businesses and a low number increases the value of customers and reduces the cost of acquiring them.
An automated billing solution can help greatly. It can reduce issues like expired credit cards, easily include add-ons and upgrade or downgrade accounts as needed. It makes regular billing adaptable and better able to respond to customer needs.
So, are you ready?
It may feel like a big step to move away from a manual process, but it’s a necessary one. It will make your business quicker to respond to changes, get accounts paid faster and provide a better experience for your customers.
