Those that are familiar with the workforce management space need no introduction to Monday.com and its powerful work OS tool. Monday.com recently moved to an automated accounts receivable (A/R) collection system, powered by Gaviti, to replace its outdated annual reporting methodology.
From Monday.com’s accounts receivables department:
With our business and sales growing exponentially, Gaviti has been a key tool in ensuring our DSO has not only stopped increasing but also shown improvements over a relatively short period of time. The ease of use combined with a highly responsive and helpful team… We have been able to quickly implement a comprehensive and versatile collections process.
When you stop to consider the broader, organizational benefits of automated A/R solutions, it’s easy to understand why Monday.com was so successful. The right A/R collection software can improve cash flow as well as the performance of key metrics – such as days sales outstanding (DSO) – within your organization.
Improve DSO Collection Processes
At its core, DSO collection is a cash flow problem. According to a U.S. Bank study, 82% of businesses fail due to poor cash flow management.
Part of this issue is attributable to the time-consuming processes inherent in manual collections. DSO collections and cash flow already vary from month to month. When you add the time spent managing spreadsheets across late payments, grace periods, and lines of credit, you have an untenable system where staff spends more time corralling reports than processing payments. And while you may not enjoy managing the nitty-gritty details of your business’s finances, your financial processes are ripe for optimization. Consider just a few ways that accounts receivable collection software can streamline your enterprise DSO:
- Collect on accounts when they’re due with automated customer reminders
- Create a single source of truth with a centralized A/R database that eliminates the need for tracking/compiling across different spreadsheets
- Faster invoicing through the elimination of unnecessary payment delays
- Standardize your process for consistent, repeatable collections every time
- Streamline payment collection for clients, decreasing the odds of entry errors and making it more likely you’ll get paid on time
When you work to improve your accounts receivable collection, you’re working toward a healthy financial process where DSO stays low. But that’s not the only benefit of an A/R collection solution.
5 Benefits of Automated Accounts Receivable Collection
In any discussion about the benefits of accounts receivable automation, it’s important to cover the broader benefits it provides:
- Better staff efficiency by reducing the manual hours required to perform collections tasks - all those hours you spend chasing invoices, calling clients, or writing follow-up emails add up.
- Ensure your data’s accuracy - real-time accurate data will prevent your company from making errors.
- Improve customer relationships by committing to regular, direct communication – you might be surprised how many clients simply forget to pay and appreciate the reminders.
- Increase your team’s satisfaction by eliminating the hassle of tedious work – let them focus on more energizing, strategic company projects.
- Reduced labor costs through better use of your existing workforce – labor-hours you save with automation can be applied to more important, value-generating tasks within the company.
The benefits of the accounts receivable collection software are clear, and once you’ve deployed automation, you’ll have a hard time going back.
A/R Collections Best Practices
Although automated accounts receivable software brings a new dimension to your financial processes, the fundamentals of accounts receivable best practices remain the same. It’s a straightforward process that nevertheless tends to get bogged down by inefficiency. This is where automation software pays off.
Consider how you can leverage financial technology like this throughout your organization to improve key financial metrics. Technology is one option. Outsourcing accounts receivable collections to a service provider that can handle all the details for you is another. You have plenty of options, and now it’s just a matter of selecting which improvements will yield the best results for your enterprise.