The Risk Of Not Using Days Receivables Outstanding Software
DAYS RECEIVABLES OUTSTANDING
Allowing days receivables outstanding (DRO) to remain unchecked can lead to an organizations downfall. businesses rely heavily on having the correct receivables tracking, analysis and payment processing mechanisms in place to ensure their financial stability and solvency. Companies who forego the use of quality technology solutions might find themselves in perilous position.
The ability to accurately track and bill customers and ensure timely payment is critical to maintain good working capital ratio. Software solutions have already been developed in order to streamline the process of collecting payments. Order to cash software, for instance, automates much of the process that involves payments to customers. These technologies provide management holistic view of receivables, allowing businesses to better maintain their financial health and adequate working capital.
DRO is an accounting metric that is used to measure how long after sales transaction it takes for company to collect payment from its customers. Naturally, the longer it takes for customers to pay, the more of financial burden it places on the company. On the other hand, prioritizing this metric with the use of software keeps receivables and payments under control.
Order to cash software also provides the ability to efficiently connect customers with accounts receivable easily and with minimal effort. Accounts receivable systems are typically integrated into payment gateways that facilitate the bi-directional flow of financial data and payments between customers and businesses. This junction is where accounts receivable, credit and collections teams have their data and actionable insights, enabling retailers to grow sales and better manage credit risk.
Moreover, these software solutions offer centralized platform of records, eliminating the overhead cost of tracking invoices and payment documents, when they are spread across multiple departments. This makes it easier to track receivables, key piece of data needed to assess performance against customer commitments.
Furthermore, order to cash software helps track payment due as well as any discounts or other incentives that are to be provided. With the ability to accurately monitor DRO, the company is in better position to mitigate risk and safeguard their financial health. This can, in turn, accelerate business growth, as the threat of delinquency decreases.
Reducing the risk associated with DRO following collections is the goal of leveraging order to cash software. Such solutions can provide businesses the peace of mind that comes from knowing that their receivables collection process is being actively managed. In addition, these solutions bring efficiencies to customer management, and ultimately, offer executives an improved overall experience.
