The invoice collection process for overdue funds can be costly and time consuming, tying up your Accounts Receivables (AR) team’s resources. Unfortunately, the longer these funds remain uncollected the bigger the chance that they will never be recovered. In fact, more than 50% of 90 day+ payments due go uncollected by businesses. That can be problematic to an organization’s cash flow, profitability and ultimately its ability to stay operational.
While the possible reasons behind a customer’s failure to pay are numerous and may not be resolvable by AR, there are some steps the team can take to minimize the pain points in the collection process. The most important step is a review of internal invoicing practices. Correcting an inefficient and poorly documented invoice trail will go a long way towards positively impacting liquidity management and reporting. This is especially true with manual AR processes.
Manual invoice processing and cash collection are slow, costly and inherently prone to errors. Additionally, they don’t offer a lot of visibility into cash flow – what funds are coming in and when, what invoices are overdue and how often a customer has been contacted about the missing payment. Add to that the hidden costs associated with manual invoice collection and it’s no wonder that the performance of organizations still using manual processes is falling behind that of the growing number of companies now using automated systems.
Invoice automation is an important key to creating accounts payable best practices. A recent Ardent Partners ePayables research report stated that streamlined, electronic AP processes can result in a 400% increase in visibility and a 17% improvement in staff processing efficiencies. Statistics like that are hard to ignore.
Read this practical brief for more insight into invoice collection and how to improve your cash flow: “The Challenges of Invoice Collection and What to Do about Them”.
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