Three things distinguish best-in-class B2B accounts receivable (A/R) capabilities from the rest of the pack: speed, cash automation and capital management.
Companies on the leading edge of the A/R performance curve onboard customers quicker, support organizational working capital management objectives more effectively and deploy advanced automation to minimize manual activities.
MSTS recently surveyed 200 Europe-based B2B corporate finance and A/R executives to learn more about their A/R goals, pain points, improvement priorities and processes. The findings, which will appear in a final report (coming soon), suggest there exists significant room for improvement when it comes to onboarding, collections and automation:
- Onboarding speed: More than one-third of responding A/R teams report that it takes an average of four or more days to onboard new customers.
- Working capital management impacts: Respondents report relatively high day sales outstanding (DSO) levels: 43% of responding organizations report DSO of 31 to 45 days; and 38% of responding organizations report DSO of more than 45 days. Bad debt write-offs also represent an A/R pain point with nearly one-third of responding companies annually writing off more than 11% of their receivables as bad debt.
- Automation: More than nine in 10 (92%) respondents report they manually input data into their A/R systems, 21% of respondents identify paper checks as the most frequent payment method, and 11% still rely on traditional mail to send invoices to customers.
Making headway in those A/R areas has been difficult during the COVID-19 downturn. Almost half (46%) of our survey respondents report they set aside work on the automation of manual processes due to the pandemic and its many business challenges. As the external environment improves, companies committed to enhancing their A/R automation should be able to resume progress on those objectives. But what about A/R teams that are unaware of how their performance stacks up to industry peers? One way to gain some clarity on that matter is by asking the following questions:
- How often do we lose customers during onboarding?
- How often is the sales team involved in non-sales activities?
- Does the volume of customers’ distinct invoicing and billing requests pose challenges?
- How frequently are payments misapplied?
- Which way is DSO trending?
Answers to those self-assessment questions should sharpen awareness of the scope and provide valuable insights to making improvements to elevate your A/R performance.