2018 has come and gone, and many finance and accounting teams have just closed out their books for the year. But as they begin to pick their heads up from regular grind of closing activities, many accounting and finance professionals are starting to gaze out at the rest of the year ahead and contemplate what can be made better by this time next year.
With our perspective from serving more than 20,000 customers and our obsession with all things A/R, here are what we think finance and accounting teams should be resolving to do in 2019:
As with anything in business, it’s hard to improve if you can’t measure it. With our work-lives only moving closer to a real-time pace, it’s never been more important to be able to know where certain A/R metrics stand at any moment. Whether it’s Days Sales Outstanding (DSO), Average Delinquent Days (ADD) or Accounts Receivable Turnover (ART). Striving to measure the efficiency and effectiveness of A/R teams and solutions should also be prioritized - that way metric goals can be set and met and playing a role in the organization’s continual improvement.
Bring collections in line with cash forecasting
When analyzing previous collections activity, looking for key issues is important to projection accuracy: how much of your A/R was collected outside of terms? What was the frequency of contact to customers with open invoices? How often was there an error or dispute? How quickly were those disputes rectified? Management working in conjunction with A/R staff on the front lines can help pinpoint issues, bring a lagging A/R aging into focus, and will help generate more accurate forecasts for the New Year
Get paid faster
Most companies are in the business of selling products or services - but for businesses who offer credit, those sales are often merely the preamble to getting paid. Getting paid slowly causes all kinds of problems for businesses; strains on cash flow, less available working capital to make important investments in advancing the business or even maintaining basic solvency are all inextricably linked with how fast businesses get paid. In 2019, what steps can CFOs, Controllers, Finance Directors and A/R professionals and others take to get from receivable to received in the shortest amount of time?
Stop wasting time
Accounts receivable is an essential and, in some ways, revered function with in businesses. After all, they’re the team that shepherds the money into the company. But to achieve the feat of turning invoices into cash takes a great many tedious tasks and a lot of time. Invoices need to be created, then sent out, then customers need to be reminded, then reminded again, then called. And when they finally pay, A/R staffers often need to key payment info into a payment system and reconcile the payment in a separate accounting platform. With only so many hours in the day, and every business now trying to wring as much inefficiency as possible out of their operations, A/R teams and leaders are challenged to find every possible way to offload menial or highly repetitive work.
Reduce typos and data entry errors
And along with all those tedious tasks above, comes the requisite amount of manual data entry. The more manual steps there are in accounts receivable workstreams, the more opportunities there are for mistakes and miskeyed info. That mitigating work then slows down payments and creates additional work to track down and correct errors—or potentially worse, simply results in unaddressed accounting accuracies overall. In 2019, it’s time to assess which steps in the A/R process can be automated or eliminated altogether.
Adopt a Customer Experience mindset
Let’s not forget the other important part of accounts receivable: your customers’ experiences with your business and brand. Those customers—whether businesses or consumers—are all subject to the fact that streamlined, digitally enabled experiences are becoming the preferred method of interacting and transacting. After all, when was the last time you ordered merchandise from a printed catalog or used a phone book? With more than half of all bills now being paid online, the best companies, in 2019, are resolving to rework and streamline their bill payment and overall customer experiences according to these clear preferences.
Of course, making A/R better isn’t necessarily everything. But businesses who make big gains in the five resolution areas above are highly likely to improve their overall business performance. Happy new year and happy collecting!