Cash Forecasting

The corporate cash forecasting process involves reviewing financial documents and completing complex calculations to predict how much cash the business will have at a specific date.

Collections Performance Metrics

Collections performance metrics refers to the group of calculations accountants use to monitor collection trends. By extension, these metrics also help managers determine how well accounts receivable teams carry out their jobs.

Collector Efficiency

Business owners and accountants can use several metrics to determine how quickly customers are paying their bills. Collector efficiency refers to the success rate of collecting debts owed.

Average Days Delinquent

Average days delinquent (ADD) refers to the average number of days that pass between due dates for invoices and the receipt of payment. Accounts receivable teams use this metric to evaluate client accounts and analyze payment delinquency across several accounts.

Receivables Turnover Ratio

Receivables Turnover Ratio

Managers use receivable turnover to measure the effectiveness of their accounts receivable team and how well they collect on invoices owed. That, in turn, helps managers determine how well they manage their assets, which includes company inventory.

Days Sales Outstanding (DSO)

Days Sales Outstanding (DSO)

Days sales outstanding shows the average number of days it takes a business to convert a sale into cash. Managers usually calculate DSO on a timed schedule, such as annually, quarterly or monthly.

Accounts Receivable Aging

Accounts Receivable Aging

The accounts receivable aging report categorizes a company's accounts receivable according to the length of time an invoice has been outstanding. The table lists all current customers, their balances, and how they are categorized. Companies can then use this information to determine how to proceed with collecting debts and whether it’s worth pursuing.

Cash Flow Statement

Cash Flow Statement

A cash flow statement is a financial document illustrating how money moves into, through and out of a business. It shows how much cash the company has on hand to pay its financial obligations and how much it keeps in reserves.

Dunning Notice

Dunning Notice

Also known as a dunning letter, this refers to a message sent to encourage customers to pay. These messages generally start out neutral and friendly and then become sterner as time goes by. In the past, these messages took the form of actual letters, but modern businesses use many different forms:

Average Collection Period

An average receivables collection period refers to the typical time it takes for companies to receive invoice payments. More specifically, it describes the time that elapses between the sales date and the date the customer paid for the goods or services rendered.

Order-to-Cash Cycle

The order-to-cash process refers to converting orders into cash payments for the business while fulfilling orders for customers. It is commonly abbreviated as “O2C” or “OTC” and covers the sales and fulfilment process from start to finish. While both B2C and B2B companies have an OTC process, it manifests differently.

Collections Representative

Also known as accounts receivable representatives, these professionals dedicate their efforts to ensuring customers pay their invoices in full and on time. Collections professionals are responsible for making phone calls, sending emails and taking other steps to ensure customers make payments.

Accounts Receivable Factoring

This type of loan allows business owners to pass the risk of payment on to another company. That creditor fronts the majority of the money owed so the business owner has cash in-hand to meet immediate obligations. The amount paid upfront depends on the industry and the risk associated with that industry.

Receivables Document Management

Document management provides the perfect solution for properly storing and organizing all your accounts receivable documents. Companies today need software to streamline their accounts receivable process. This turns most documents into electronic copies that become far easier to sort.

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