There are many accounts receivable departments still using spreadsheets and highlighters to manage their accounts and tell them when to make calls. Often times tactics like this, however, end up costing a company by causing them to collect on their open accounts too slowly. These back ups on cash end up forcing a company to take out loans and build up bad debt. This is true not only for small companies, but for companies with many large accounts too. Bitly was prone to having slow cash flow due to their manual processes, as well.
Bitly was founded in 2008 as a link shortening service, allowing marketers and businesses to share information with customers and prospects without running into ridiculously long URLs. Bitly quickly expanded their product offerings, allowing companies greater control over their marketing tools. Customers of Bitly can now brand their shortened URLs driving a higher clickthru rate, gain real-time analytics on their shared URLs, data management and more. Of these customers, 75 percent are Fortune 500 companies and popular name brands such as Nike, Spotify, Pepsi, Progressive, Keurig, Buzzfeed, Chegg and more.
Before using an automated accounts receivable software, Bitly’s collection process was extremely manual. The A/R specialist would export an aging report filtered by aging buckets, from 1-30 days past due to over 120 days past due. From there, they would sort each bucket by the highest amount and begin sending out emails one-by-one to each customer. If the customer didn’t respond, the A/R specialist would pick up the phone and call the customer. With 1,200 invoices created a month, this manual process was cumbersome for one person to handle.
Now that they are using an automated accounts receivable software, many of their previously manual tasks are being handled by an automated workflow. Once their invoices are created in their ERP system, an automated email with invoice information is automatically sent to their customers, with reminders being sent once a week until the invoice is paid. All that is left for their collectors to do is manage customer responses and disputes.
These automated activities have cut their staff work time in half, according to their Director of Finance. Even with only half the amount of work, Bitly has seen dramatic changes to their key performance indicators in their first year of implementation. Bitly’s collection effectiveness index increased from 50 percent to 75 percent and has stayed their month over month for the
entirety of 2017. Their past due percentage has decreased from 40 percent a month to 25 percent a month, as well. Overall, Bitly has seen a significant decrease in bad debt. “Our A/R specialist has more time to concentrate on customers who have questions and disputed accounts, we have more time to spend with them and haven’t had bad debt for over three months,” Bitly Director of Finance explained.
Using an automated accounts receivable software to manage their accounts receivable didn’t just make their work easier, but it made it more efficient and accurate. Since their collectors no longer were forced to spend their time completing manual tasks, they were able to open cash flow and reduce bad debt in the business.