In the current economy, the financial health of a business relies on its potential to generate working capital, irrespective of its size and industry. To maintain a healthy DSO and stable cash flow, your collections team must guarantee that the cash from a sale is received within payment terms.
While collections teams are trying to ensure that 90% of receivables or more are current (within payment terms), the reality is that more than 38% of invoices are not paid on time, which impacts DSO and revenue.
According to the National Association of Credit Management, the value of an uncollected dollar after:
- 3 months depreciates to 87 cents,
- 6 months deteriorates to 67 cents,
- After 1 year it goes down to 46 cents.
Ever wonder if your collections process is efficient enough to maintain cash flow? Or how to make your collections process more efficient?
Collections management faces many tailbacks and process errors due to the lack of internal and external collaboration and standardized processes. You gain many benefits when you transform and streamline collections management.
Collections Maturity Model
When businesses grow, it is because demand for their products or services goes up. When customer volume increases, challenges in collections also increase. Such aspects reflect the need for an operations maturity model. A model that helps analyze, align, distribute, and execute collections processes to meet the KPIs and maintain healthy cash flow.
Download our free excel-based collections maturity model template and fill in the required details. The tool will help you identify and analyze the maturity of your collections process, whether it is ‘ad hoc‘, ‘reactive ‘, ‘preventive’ or ‘proactive.’ It will also suggest some effective tips for you to leverage and improve the collections process and move up the maturity pyramid.
Here’s a sneak peek into how to use the template.
The HighRadius 𝐑𝐚𝐝𝐢𝐮𝐬𝐎𝐧𝐞 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬 (𝐀𝐑) 𝐒𝐮𝐢𝐭𝐞 is an AI-powered solution that automates end-to-end AR processes, including e-invoicing, payments, collections, cash reconciliation, and credit risk management for B2B businesses. The solution, tailored specially for mid-sized businesses, puts your AR on auto-pilot, allowing your finance team to concentrate on high-level tasks. It seamlessly integrates with the top mid-market ERPs and aims to scale with you!