Mark Harrison, Founder & CEO, Callisto Grand
Sam Dhingra, Director Solution Engineering, HighRadius
Buying and Implementing Technology for Treasury Professionals
The rapid shift towards digital transformation has led to a significant change in the CFO’s role. These uncertain times triggered by COVID-19 have made the CFOs focus more on having the suitable Collections strategy in Order to Cash (O2C) to ensure that the business’s accounts receivable stays disciplined. We interacted with over 200 Accounts Receivables (A/R) leaders globally across Fortune 1000 companies to understand their views and concerns on their collections strategy. We observed that collections teams’ realized they needed to adopt a proactive approach to improve the metrics like Days Sales Outstanding (DSO), Collection Effectiveness Index (CEI) Average Days Delinquent (ADD), and strengthen customer relationships.
Collections as a process in O2C have never been an easy one, and previously it was highly dependent on a reactive dunning model. This model meant waiting for customers to go past due dates before collectors started following up with them. While this model may have been adequate in the old economy, the current state deems it high-risk, if not obsolete. With more customers turning delinquent or failing to pay, significant effort and cost are expended to capture overdue payments.
Collection teams need to develop a strategy that helps them ensure the promise-to-pays are honored by analyzing customer payment behavior proactively to optimize working capital.
2. Leverage the payment date prediction tool to reduce DSO
AI and ML can help collections management become more proactive by predicting payment dates at a customer or account level based on past payment behavior and current open invoices.
1. 7.1% rise in the average days to pay
2. 21.50% decline in payment commitment honoring
3. 32.50% spike in dunning activities
Collections operations within organizations are in dire need of innovations that could improve the overall process efficiency and help optimize working capital. Transitioning from traditional methods of operation to more data-driven futuristic and scalable digital solutions is the way forward. Additionally, having global visibility across all A/R operations with the help of a platform that consolidates all the data from internal teams helps break silos and contributes to faster revenue growth.
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The HighRadius RadiusOne AR Suite is a complete accounts receivable’s solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne AR Apps to improve productivity, maximize working capital, and enable faster cash conversion. Affordable, quick to deploy, and functionality-rich: it is pre-loaded with industry-specific best-practices and ready-to-plug with popular ERPs such as NetSuite and Sage Intacct. The HighRadius RadiusOne AR Suite is designed to automate labor-intensive processes while streamlining credit and collections activities for faster AR processing, better cash flow and improved profitability.
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