Securing Achievable Accounts Receivable Deductions Through Software
BEST PRACTICE FOR EFFECTIVE ACCOUNTS RECEIVABLE DEDUCTION MANAGEMENT TO IMPROVING DAYS SALES OUTSTANDING
Modern payment practices are more complicated than ever before, from multiple payment methods to troublesome deductions, and the Order-to-Cash process is especially complex. Accounts Receivable (AR) deduction management automation software is the most effective solution available to finance executives looking to streamline their AR processes and improve order-to-cash cycles.
The goal of finance executives is to enable the order-to-cash process to move quickly, resulting in improved Days Sales Outstanding (DSO). Streamlined software systems make it easier to track and manage deductions. AR automation software allows finance executives to monitor, manage, analyze, and predict variables within the Order-to-Cash process. This improved visibility allows executives to make better decisions, reducing deduction disputes and delays in the payment process, ultimately lowering the DSO.
LexisNexis found that the average cost to process simple dispute was $77 for companies with revenue between $50 and $500M, and $64 for companies with revenue over $500M. In addition to the cost of investigation, finance executives must also consider the load on staff, with failure to resolve deductions quickly leading to further delays. Automated processes to improve the accounts receivable process can eliminate considerable amount of manual effort and help expedite resolution of deductions.
Finance executives should look for an AR automation software that can provide preset best practices for deduction management, and recommend processes to bring resolution more swiftly. The best software package will incorporate rules-based processes and custom directives, creating an automated workflow. Instead of manually entering deduction codes, matched deductions will be fully automated, including the capture and tracking of relevant audit points. Automated calculations reduce errors and help finance executives optimize the entire process, while receiving real-time insights into their accounts receivable that can be used to optimize operation performance.
Finance executives have powerful tool at their disposal AR automation software to improve their operations and enhance the Order-to-Cash cycle. With the right software and dedication to implementing best practices, finance executives can dramatically improve their deduction management processes, reduce dispute costs, and expedite resolution of deductions, all of which will ultimately contribute to lowering DSO and enhancing overall cash cycle performance.
