One of the main goals for finance team is to improve working capital. This blog will focus on a few ways that the Accounts Receivable team can help improve working capital for an organization. Working capital is especially important for SME, as they have fewer financing options than larger organizations.
Get Invoices to Your Customers Faster
The quicker your invoices to your customer the faster you will get paid. One of the red flags for an organization is if you are still mailing invoices. Today invoice distribution should be automated and sent digitally. In some cases that means sending an email with a PDF and in other cases, for larger organizations, that may mean getting information into a portal
Make Sure Invoices are Correct
An issue with an invoice can mean the invoice cycle will start again. In a worst case scenario an organization let’s the supplier know the invoice is incorrect close to the payment date and that starts the clock again. This is an example of where invoice automation software, like OnePosting, can help an organization. OnePosting can check a range of things like if a PO number is needed, does the tax add up, and are the supporting documents included.
Create a Plan for Late Payers
There are a number of tactics that can be used to create a plan for late payers. The first is to identify who is late and have the AR team follow-up. Many organizations will also enforce the late payment charges and provide regular documentation to the new increasing cost.
Offer Different Payment Options
There are many ways to receive payment today outside of cheques. There are many digital payment platforms that can be used. Digital payments can cost a little more than cheques but can be much faster than sending cheques. The prices for these digital payment platforms continue to decrease as well.
A SME will often have little control over the payment terms of their larger customers. This can mean terms of 60, 90, and even 120 days. SME’s can unlock the value in the invoice by using invoice financing. Accelerated Payments is one of our partners and can provide invoice financing to SMEs based in Europe and North America.
If you would like to understand how OnePosting can help improve working capital for your organization book a meeting with one of our team members.