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The accounts receivable function in any company, if managed efficiently can result in high amounts of savings every year. For some firms, maintaining a clear visibility on the cash flows and keeping a track on credit management of different sources are a problem.
Hence, these companies lose out on big amounts of Rands due to extended DSO (daily sales outstanding) periods and no clear visibility with respect to future cash flows. This hampers the decision making of CFOs and top management due to lack of a consolidated picture of cash flow and working capital.
The responsibility then is on the A/R department to manage this process effectively so as to minimize losses due to hiccups in the process. Most A/R teams collaborate with the treasury department and chart out clear cut strategies on streamlining the process. The CFO needs to take an initiative in revamping existing processes to improve efficiencies and in turn the bottom-line.
Almost all organizations do not have these sophisticated systems in place. And these companies lose out on lots of cash due to inefficiencies in the process or workflow of the accounts receivble cycle. For example, issues like deductions and disputes occur outside the A/R department. Lack of a clearly defined workflow and an optimized set or metrics for these issues can lead to higher DSO's and bad debts for the company, at this point, the company will start heading downwards instead of moving forward while increasing the cash flow.
It is vital for any company to have an efficient accounts receivable process in order to keep track of where the money is going. It is very easy to forget about a debt and eventually it turns into an aged debt which you then cannot collect on as it has entered the bad debt status, so you are forced to write it off in your books as a bad debt and there is no way to recover that amount of money.
Another challenge that most companies face is that there is no time to run after those that you need to collect the money from as it is a process that takes up a lot of time. To continue phoning customers for reminders, or emailing and sending letters only to get a response back saying that they have not received any letters and emails. This is a common way of which customers tend to waste time as they either do not want to pay at all or that they do not want to pay at the time needed.
To stay competitive in today's economic situation, more and more companies, not just large corporations look to generate savings and add to their bottom line by managing the accounts receivble process more efficiently. ECCM can help you with this process from the beginning till the end, whether you have outstanding debts already or you just need a system to maintain your accounts so that it does not reach the bad debts status, ECCM will assist you all the way. You can be in control of all the accounts and will be able to monitor everything at your finger tips. ECCM has a few service packages to choose from so you can choose which package suits your company best. Why not let ECCM take on the baggage and manage everything with regard to credit control.
So does your company have an efficient accounts receivables process which is currently improving your cash flow and is one that you can depend on???