Accounts Receivable Strategies For An Order-To-Cash Solution
Accounts Receivable Strategies
The modern age of digital business brings about any number of orders-to-cash solutions, but with them come the administrative complexities of recognizing and settling accounts receivable (AR). It is essential that companies gain an understanding of how to optimize their AR strategy if they are to maximize net cash collections, efficiencies, and the customer experience.
Executive Overview
Accounts receivable is the money owed to you by your customers, reflecting the purchase of products or services on credit terms. As part of an order-to-cash system, implementing an effective and efficient AR strategy is key to streamlining the end-to-end purchasing process.
An effective AR strategy starts with setting credit terms, processing invoices, and managing disputes while placing priority on cash collections. While it may appear simple on the surface, the process of refining AR strategies can introduce several complexities.
A successful AR strategy will always have the customer at the heart of it. Aiming to maximize customersatisfaction while keeping collection costs measurable encourages collaborative approach between the company and their customers.
How to Implement an Order-to-Cash Accounts Receivable Strategy
Companies can leverage orders-to-cash (OTC) software to effectively implement their AR strategies. OTC software allows company to fully automate the entire accounts receivable process, from invoice setup and issuance to cash collections, creating an efficient and accurate system for managing customers.
There are few steps you should take in order to implement an order-to-cash accounts receivable strategies:
1. Establish Credit Terms
In order to accurately track accounts receivable, company must first establish their credit terms. This requires setting the timeframe customer has to pay the debt (30 days, 60 days, etc.) and the payment methods they may use (check, credit card, direct debit, etc.) Make sure credit terms are reasonable?too long of payment window can cause number of cash flow problems, whereas overly stringent terms can disrupt customer relationships.
2. Create and Send Invoices
Once credit terms are established, the invoice can be created. OTC software lets companies automate this step of the accounts receivable process, ensuring that invoices are accurate and can be sent to the customer in accordance with the credit terms.
3. Dispute Resolution
Customer disputes are another issue that corporate finance departments need to address. OTC software makes it possible for companies to quickly and accurately identify and address disputed payments.
4. Collections
OTC software helps manage cash collections from customers. Automated reminders help companies stay on top of payment deadlines, and companies can easily monitor progress on invoices and unpaid debts.
Conclusion
By implementing an effective AR strategy, company can maximize collection efficiency while nonetheless promoting favourable customer experience. Leveraging the power of OTC software, companies can successfully and reliably manage their accounts receivable and ensure their finances remain in order.
