Hitting your cash flow KPIs with certainty

This blog post provides a short introduction to how Corcentric can guarantee you hit certain cash flow KPIs for your business, such as reducing days sales outstanding (DSO), bad debt, and write offs. You can find more detail in our 22-minute webinar on How to achieve your cash flow KPIs with certainty in 2022.

When people talk of driving down DSO, or fixing this, they tend to mean incremental improvement, by way of applying changes to people, process, and/or technology. These improvements take time to have an impact and often cost the business in terms of capital outlay and commitment of resources.

At Corcentric, we talk about fixing DSO in the very real sense of setting DSO to a desired number of days. We literally guarantee your payment on a specified number of days after the invoice is generated, with our Managed Accounts Receivable (Managed AR) service. This may sound too good to be true, so let us explain the process in a little more detail.

Our ability to guarantee the payment stems from the fact that we can work as an extension of your accounts receivable team. Essentially, you outsource the process of invoice creation, delivery, and collection to us – but we work as an extension of your business, not as a separate agency, avoiding the sometimes negative perception of businesses utilizing factoring or collections solutions to support the accounts receivable process.

Typically with a business process outsourcing (BPO) solution for accounts receivable, you would place people, process, and technology between you (the seller) and your customers (the buyer). But this does not guarantee the outcome without the addition of another important component: funding.

It is our unique mix of BPO and Finance that underwrites the results. The following guaranteed business outcomes are a direct result of this.

Immediate DSO reduction

Reduce your DSO immediately, from day one! Corcentric takes ownership of the full ledger, or perhaps just a sub-ledger as a pilot project, and then funds the payment of every invoice, on time. This could be payments made on 15 days, 30 days, or any other time after issuing the invoice.

Eliminate collections risk

With a non-recourse agreement, this completely de-risks the process from your perspective. By accepting responsibility for the full ledger, Corcentric takes the rough with the smooth and makes every payment on time. Say goodbye to late payments, bad debt, and write-offs.

Augment your team

Corcentric Managed AR is designed to complement the capabilities of your existing team, rather than replace headcount. Our solution allows your existing FTE resource to be applied in a more focused way. You can also support growth without the need for recruitment, something which is particularly useful when trying to recruit at times when it’s a candidates market and finding the right employees takes longer.

Simplified payment processing

Receiving your payments as one consolidated payment, rather than collecting individual invoice payments from your full range of customers, simplifies the cash application process. Corcentric also provides payments with data in a system-friendly structure to support the ingestion and processing by automated accounts payable systems.

Business Model-as-a-Service

There is no capital outlay or investment in technology infrastructure required. Corcentric provides Managed AR as a service, where the responsibility for evolving the O2C technology and meeting customer requirements for invoice delivery rests with Corcentric – removing this cost and worry from your team.

Best-in-class customer experience

Having experience in providing outsourced accounts receivable processes for over 15 years, across virtually every industry and into more than 50 countries, we have evolved our processes and service to maximize success. With a dedicated customer service team and a white glove approach to account handling, we understand the value of your customer relationships and treat your customers with the care they deserve.

Measurable results

Managed AR provides a range of benefits that can be calculated and some additional benefits which are harder to put an exact value on. The following can be precisely measured and reported, to help you meet or exceed your KPIs.

1. Unlocking working capital – turn your AR Float into cash on your balance sheet.
2. DSO acceleration – to achieve an equivalent cash saving, you would need to borrow at a Weighted Average Cost of Capital (WACC).
3. Credit guarantee – receiving payments from a non-recourse agreement removes the equivalent cost of credit insurance.
4. Bad debt reduction – as Corcentric absorbs customer defaults on payments, you make a gain proportional to your historic average write-offs
5. Payment processing – eliminate your cost of accepting and processing payments from customers, as well as simplifying the cash application process.
6. Save FTE value – credit decisioning, onboarding, dispute management and collections processes are supported by tenured team members, saving you in-house staffing costs.
7. Invoice presentment – remove the in-house cost of supporting a growing number of customer, and government mandated, requirements for invoice formatting and delivery.
8. Revenue growth – with best-in-class O2C processes, there is a measurable impact on EBITDA percentage.

Don’t just take our word for it, you can see a real-world example of savings we have made for one of our clients in our 22-minute webinar on How to achieve your cash flow KPIs with certainty in 2022.

Additional value

While the eight points of value mentioned above form a basis for ROI calculations, Corcentric Managed AR goes beyond straightforward financial benefits. Again, the webinar will provide you with a more nuanced explanation of these values, but some key additional benefits are listed below.

1. Reduction in IT burden – from invoice generation, formatting and distribution to information storage and connection with third parties, Corcentric lightens the load on your IT resources.
2. Improved cash flow – predictability and visibility of cash flow improves forecasting and brings certainty to budget allocation.
3. Scalability – in-house AR teams and technology take time and effort to scale. Corcentric’s as-a-Service approach is inherently scalable with no implementation cost to consider.
4. Credit flexibility – non-invasive credit decisioning to support your business’s sales function and disputes are handled without directly impacting credit.
5. Payment terms – flexibility to support customer needs and remove the administrative burden of onboarding.
6. Third-party expense – reduce existing third-party O2C costs, including: credit inquiries, invoice financing, debt recovery, and legal expenses.
7. Analytics and business intelligence – connect invoice and payment data directly with all common ERP systems, and access a dashboard and custom reporting via the Managed AR platform.

Hit your cash flow KPIs in 2022 – Guaranteed!

You might be surprised by how quickly you could hit your cash flow KPIs by working with Corcentric in 2022. Our Managed AR solution requires minimal IT involvement to deploy and can allow you to quickly accelerate O2C performance while redeploying valuable staff to more profitable activities.

Take a look at our 22-minute webinar on How to achieve your cash flow KPIs with certainty in 2022 to find out more.