E-book on the Collections Operations Maturity Model: Lower DSO by Enabling People, Process, Data, Collaboration and Technology
How would you feel about driving a gorgeous Lamborghini that has no dashboard?
Just to help you imagine, while driving you would have no idea:
Would you feel safe in this adventurous/treacherous ride?
The answer is no.
The same applies to Accounts Receivable. Even if your A/R is running as smooth and fast as a Lamborghini (congrats!), you still need an insightful dashboard to keep you up-to-date with all the crucial metrics that will help to make accurate decisions for times ahead as well as to change course promptly if need be.
It is imperative for finance and A/R leaders to opt for a dashboard that ensures key working capital metrics are always your fingertips.
The following chapter explains the major challenges of not using a dashboard. It also elucidates the major drawbacks of working off a data-heavy, spreadsheets-based dashboard.
1. Lack of visibility into performance and productivity
The inability to track the progress or regress of the credit and collections teams’ performance and productivity which inevitably affects the bottom-line as well as the top-line revenue of the company is a major concern for finance executives. For instance, they would not be able to track:
Elementary metrics do not give full insight into the performance and productivity of team members. Hence, by ignoring these critical data points, executives might end up making inaccurate decisions.
2. Lack of access to real-time insights
Reporting is a time-consuming process. While making timely accurate decisions is imperative for finance leaders, opting solutions based on weeks/months old metrics and data can be catastrophic for the company. Therefore, it is extremely essential for finance executives to have real-time data and crucial metrics on their fingertips that can be easily accessed through a customizable dashboard.
3. Time-consuming traditional reporting
Traditional reporting tools may permit users to publish reports that contain KPIs and data visualizations, but they often require power user skillsets or assistance from IT. These visualization-based reports lack true analytic depth and don’t allow users to provide descriptive text that contextualizes the analysis. Plus, they don’t fill the need for published reports demanded by decision-makers, executives, and board members.
4. Data Overload
On average, 1000-10,000 payments are made in a B2B company. In order to crawl through these huge payment volumes which might include payment by a client paying for its open invoice or the result of a dunning process or payment along with a deduction. Manually collecting, segregating and analyzing these large volumes of data takes a huge amount of time and makes the reports data-heavy. Hence, inevitably it delays the reporting process.
Therefore, it can be safely concluded that the slow and non-responsive machinery that is usually used by businesses for reporting lacks the agility to respond to strategic business needs and take timely course corrective actions to avoid any future ordeals.