With the global business climate remaining uncertain, better working capital management through efficient Credit and Accounts Receivables management remains a top priority for Finance executives. In the past, companies typically have invested heavily in ERP technologies to achieve this objective, and while benefits do come, they do not meet expectations in a large percentage of cases. An area where most companies perform poorly is in converting the data they capture into actionable intelligence - one of the key reasons why most businesses spend 40% of their collections effort chasing 10% of AR. Leveraging Analytics to design more effective collections strategies is an important element in improving collections performance. Without a detailed analysis of customer segments and payment patterns, etc., organizations tend to focus on chasing a few high-value customers month-to-month, when the majority of the actual past due balance may arise from some other customer segment. This results in companies under-performing on both operational efficiency and performance of key outcomes such as DSO and Past Due %.
We discuss in detail how to use analytics to establish more effective collections strategies this month in IOMA’s institute of Finance and ManagementController’s Report. You can read the entire article here.