3 tips on how to implement better cash collection
The business world is currently facing unprecedented challenges with closures forced on certain sectors, the furloughing of staff, sales down with projects shelved, delayed or cancelled.
As a consequence of the current climate, I am frequently hearing the term “cash is king”. This phrase definitely rings true for those businesses who are struggling with cash flow under normal circumstances, let alone during a global pandemic. It is believed the phrase was coined by the CEO of Volvo after the global stock market crash in 1987. Those businesses with cash reserves, rather than pure profitability, weathered the financial storm whilst others didn’t survive.
“We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas.”
—Michael Dell, founder and CEO, Dell Technologies
So, the importance of cash is obvious but how are you optimising and managing your cash collection process, improving visibility, collecting what is owed more quickly, and avoiding late payments?
Customer credit can put pressure on even the most profitable business, so our recommendations are to:
- Implement a clear collection process which is reviewed and modified if required so that you can find a process that works for your organisation.
- Automate the cash collection process. This can help you to reduce time-consuming administration, automate tasks (letters, emails) and keep track of activities (calls and commitments). You should focus your team on cash collection and not collection admin. This can all help you to provide consistent customer communications.
- Report on business debtors, bad debt, and monitor improvements in cash collection.
If you’re still not sure where to start with improving your cash collection process, there are tools out there that can help to support your organisation with this. One such third-party product that supports cash collection and integrates with Microsoft Dynamics GP is Credit Hound from Draycir. Credit Hound automates many of your day-to-day credit control processes and is designed to pick up where your existing accounting system stops. It significantly reduces administrative tasks and instantly shows how much you’re owed and who you need to chase. Check out our on-demand webinar here.
In unprecedented times where cash certainly is king, refining your cash collection process and implementing a specialist product that helps you automate tasks are definitely positive steps to take to help your business to survive and thrive now and into the future.