A lot of people and organisations have been financially affected by the corona crisis. Not unexpectedly, one in three finance professionals thinks that the number of days an invoice remains open will increase in the coming months. This is shown by a recent poll by fintech company Onguard among more than 300 finance professionals. According to them, one of the reasons for the increase is that half of the companies have taken precautions, like leniency measures for customers. As an organisation, you naturally want to meet your customer. That’s why many organisations have already set extended payment deadlines. In the end, however, outstanding invoices have to be paid and preferably organisations keep the DSO (Days Sales Outstanding) as low as possible. With these practical tips, you can keep the number of days that invoices are open low, even in times of crisis.
1. Bill and trade directly
Most organisations bill once a month for efficiency. However, experience has shown that invoices are paid more quickly when they are sent immediately after delivery. Therefore, always invoice as soon as possible. At first glance, this may seem like extra work, but it prevents late payments and causes you to signal payment problems more quickly. The sooner the customer receives the invoice, the sooner the payment process starts. This reduces the chance of the customer forgetting to pay and saves work in the long term. Even if a payment period has expired, it is important to contact customers directly. The longer you wait, the longer it takes for the payment process to start.
2. Know your customer
On the one hand, you want invoices to be paid as soon as possible. On the other hand, this should not be at the expense of customer satisfaction. Responding to the customer’s needs and helping them in every way possible to pay the invoice on time, is therefore crucial. To do this, you need to get to know your customer as well as possible. Do research on this. Create certain customer segments with their characteristics, and then take a different approach for each segment. If analysis shows that certain customers are at high risk of not paying invoices – especially when things are economically uncertain as they are now – this requires a different approach than low-risk customers. With a good understanding of your customer base, you can take faster and more appropriate action when suspecting payment problems.
3. Optimise payment processes
For one in five finance professionals, lowering the DSO is the biggest challenge in the order-to-cash process. With the right tools, you can optimise payment processes. Think of specialised order-to-cash software that fully automates the entire process from invoicing to payment. Intelligent tools in software are also able to quickly discover problems. As a finance professional, this saves you time that you can invest in personal contact with the customer and offering tailor-made solutions. A win-win situation.
Lowering your DSO in times of crisis may sound too good to be true. Still, it’s certainly possible. By being consistent, billing quickly after delivery, automating payment processes and providing customised solutions where necessary. This will help you promote your own business continuity and customer satisfaction.