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CFO Tech Outlook | Monday, September 06, 2021
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Most businesses have an accounts receivable policy in place that specifies when to bill, how much to bill, and when to collect.
FREMONT, CA: While credit may be used to build client loyalty and expand the customer base in some situations, offering these payment choices without a sound cash-flow plan in place can result in cash-flow problems, even risking operations. The following are some of the most frequent issues that an Accounts Receivable staff may encounter:
Above Average DSO (Days Sales Outstanding): DSO is the average time required to convert credit sales to cash. A high DSO indicates that the clients are taking excessive time to settle their obligations, exceeding the specified payment term. If this KPI is greater than the industry norm, ensure that the credit programs enterprises offer are manageable. Additionally, it may be prudent to implement a new protocol and financial preparation.
Methods for lowering DSO:
Ineffective client service
Establishing communication channels and contact points at the start of every engagement is critical to receiving payment on schedule. Firms advocate keeping track of all communication with their customer and the communication methods to maintain a healthy information flow.
Methods for enhancing augmented reality communications include the following:
See Also: Top Cash Management Solution Companies
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