If your team is not meeting cash flow goals, don’t assume that customer AP departments are always at fault. It is a common myth in AR that AP departments don’t want to pay on time. AP departments do want to pay on time, otherwise they may have problems with auditing, relationships and forecasting.
The reason for not being paid on time is frequently that the AR department does not realize that an important part of the payment process is missing. Missing steps, documents or information in the payment cycle may be the reason that you’re getting paid late.
Here are reasons why you may be getting paid late.
Incorrect Email Address
Emails may be going to the wrong email address, and not to your customer’s AP department. Changes to AP contacts occur frequently and your team may not be notified.
Filters may be snagging your AR emails in spam folders. Emails with language that can trigger spam filters may be the culprit.
Mailed to Customer
Documents including invoices and statements mailed to your customer may be left unattended because AP is working remotely. Relying on manual correspondence may cause problems in the new normal.
AP approval at your customer may be why there are delays. AP approval processes are often different from customer to customer.
Disputes are often the source of delays. AR frequently doesn’t learn about disputes until an invoice is past due.
Paper checks can cause delay in payments. Processing and mail time can result in long delays.
Days Payable Outstanding (DPO)
Customer DPO policies can delay payments. Conserving cash with DPO policies may not agree with your terms of payment.
Some companies are struggling with cash flow due to the pandemic. You will probably have to tailor solutions on a customer-by-customer basis.
AR automation can provide solutions for being paid late by eliminating or reducing the delays that can cause problems in processing payments. Automation increases efficiency, reduces costs and results in increased profits and cash flow.
With a connected accounting solution for your AR and AP teams to coordinate work with customers and vendors, you can go digital and enjoy the benefits of office automation.
Lockstep, a leader in cloud-based connected accounting solutions, can help you boost productivity and optimize cash flow with:
- Digital Onboarding – Collect master data directly from your customers and vendors
- Accounting Inbox – Make it easy to divvy up work and track progress
- Smart Automation – Automate menial task with accounting integration
- Online Accounts – Give customers and vendors online access to their accounts
Lockstep is an experienced software partner that can help you increase efficiency and accelerate cash flow.
If you would like to learn more about how you can benefit from connected accounting solutions, please contact Lockstep at www.lockstephq.com.