Step 1. Mitigate risk
Setting a credit limit for the businesses you are selling to is the best way to minimise your exposure to a financial shortfall if any of those businesses go under. Sounds simple enough, right?
However, if you have a UK sales team, a German sales team—alongside ones in France, the Netherlands, the Middle East and numerous other locations—all selling into a global business but working on multiple ERPs you’re headed for trouble. With these teams all inputing data into individual systems rather than a central, consolidated platform, the combined credit limit that they agree upon could give a potentially very misleading view of a business’ finances. You could end up selling an organisation a million pounds worth of product when they should be capped at £200,000. Meaning you could end up covering a huge amount should that business go under.
Reduce the chances of this happening by looking for a consolidated platform that can streamline your current software and showcase inputs from all of your global teams, rather than patch over multiple systems you already have.
Step 2. Simplify collections
We all know the frustration of chasing an invoice—how many hours, calls and emails it takes for a job you accomplished on time for a client. Indeed, Banks Automated Clearing System (BACS) has revealed that half of all SMEs experience late payments and wait an average of 24 days beyond an agreed invoice payment date. But it’s not just SMEs that are affected by this issue—it’s one we face across the board.
Having patchy ERPs only makes the issue worse—you might have someone from your UK accounts receivable team, one from your French team and one from your German team chasing the same contact and the same business for late invoices.
Look to remove this duplication of effort by identifying a platform that can collate global information on outstanding invoices and automatically notify a business—and your finance and sales teams—when invoices are due.
Step 3. Resolve disputes before they happen
When a company chooses not to pay an invoice, there are usually straight-forward reasons as to why. The colour of the product wasn’t quite right, the agreed pricing wasn’t kept to, something wasn’t delivered on time, and so on.
If you have the ability to identify and resolve the reason for a dispute before an invoice is due, chances are you’ll be able to fix it and still get the invoice paid on time.
However, if you don’t have the ability to automatically escalate an issue once you spot it, or aren’t able to speak to, and collaborate with, the finance team about it because each team is running off its own system, a delayed invoice becomes more probable.
Alternatively, many existing ERPs charge by user licence—making it incredibly expensive for both the finance and sales teams to keep track of invoices. If you remove this limitation and help your finance and sales teams work more effectively together on a single platform, you’re likely to see disputes resolved long before their invoice due date.
Step 4: Reduce reporting time
A simple one—a consolidated reporting platform means you’re automatically able to get an accurate, overarching view of how your accounts receivable team is reporting.
A single platform that enables you to see all the necessary day-to-day details that may have been collected from hundreds of sources imputed in a way that makes it easy to spot a potential issue before it has the chance to cause any damage to your business.
Unifying your business across all these areas is a massive task in and of itself, but simplifying, automating and streamlining a lot of accounting processes creates an immediate benefit—as well as freeing up staff who could spend their time getting to grips with thornier, less easily-automated processes.