Data Interconnect’s Ultimate Guide to Getting Paid Faster
Why it matters
Company turnover is a key measure of effectiveness. Investors look at this, comparing like companies for how well they sell inventory and collect cash. Turnover directly relates to Days Sales Outstanding. If you have sold plenty, but have a high amount in Accounts Receivables, in one or another bucket of aged debt, it points to an ineffective management and slows down the rate at which you can replenish your inventory to fulfil new sales orders.
Turnover is a good indicator of financial health. Even if your business has invested and is not profitable, a high turnover shows you have the capacity to become profitable and shows you are doing your best across the business.
What Finance Teams can do to help
Finance teams can point to areas of the business upstream prior to the point of accepting an order, where problems may be causing issues with invoices and slowing down payment. However, before pointing the finger at other departments it’s essential to do everything in your gift to make your area as effective, productive and efficient as possible. Here are the key things we’ve found that the best CFOS and FDs we deal with care about, work on and rely on us to help them improve.
First, the list:
- account screening – for new and existing customers
- Invoice accuracy – eliminating errors that can cause delays and disputes
- Invoice completeness – ensuring all associated references and documents are available
- Invoice issuance – speed to delivery
- Invoice layout – design for clarity, legibility and a focus on the key elements
- Early payment incentives
- Reminders and Dunning processes
- Easy payment options
- On account deposits
- Late fees or late payment penalties
- Stop Policies
- Customer service focus
1. Account Credit Screening
We don’t provide software for credit scoring or screening but we do know that businesses that tighten up their policies on this for new customers prevent disappointments later down the line. Likewise, businesses that have a policy of reviewing customer credit scores periodically do well.
How We Help
We help Corrivo customers integrate their systems with the master system (usually an ERP system) that holds customers account records. We can help customers check that the account is good to go and does NOT have a ‘credit review’ flag on the account before an invoice is issued. Typically the orders don’t get out of step with this – orders are not placed when an account is in credit review, but it can be triggered by an order if an account’s credit limit is reached or comes close to being breached. Some businesses use Accounts On Stop features in Corrivo to trigger their internal credit review procedures. We make sure our systems and theirs are aligned to enable credit policies to be acted on efficiently.
2. Invoice Accuracy
Any manual keying of order data to produce an invoice is likely to have a high error rate associated with it. Even if it is ‘cut and paste’ it produces errors that become queries that delay payment. This is one of the key reasons clients move to Corrivo – automation improves accuracy – but only if it is done well.
How We Help
The Onboarding process is when we connect your systems and ours to ensure that everything in a customer order appears correctly on an invoice generated by Corrivo. Some of our clients have several order management systems, eCommerce systems and CRMs that all feed in data in slightly different formats. On top of this, there are often complicated discount codes, credit notes and the like to apply, and in many cases, an order will be split – there is no guarantee that one ORDER produces one INVOICE and one DELIVERY. A purchase order can cover 12 monthly deliveries that come in two halves, resulting in 12 invoices and 24 delivery notes. Do you see the challenge? This complexity is our speciality. It’s something we’re expert and making simpler and by doing so, the invoices are more accurate and complete – see the next point.
3. Invoice Completeness
Making sure the invoice contains all the necessary references, accurately displayed is key to those invoices being accepted and paid without quibbles. If one or more of your customers uses EDI or an Accounts Payable platform, there may be specific layout requirements and rules about how these items of data are presented. It may mean quite a departure from your typical invoice. In addition, we find the businesses that have different divisions or sell a mixture of products and services can have invoices relating to professional services and ones relating to hardware, all sent from different teams in accounts. This can confuse customers.
How We Help
We take all the order data from a client and turn it into the invoice format required on a per-customer basis. If one or two use EDI, that is all taken care of. There is a lead time on setting up a new EDI connection but our record is half a day. You will not find any highly paid consultants out there who can set up an EDI connection that quickly and with the confidence of accuracy. This should give you some measure of how efficient we are at EDI management.
We also seek and match proofs of delivery and ePODs to invoices and can send the invoices according to the client’s business rules. Some want invoices to go out only when all PODs are available. Others want to send invoices as soon as all PODs are assembled or after a certain number of days. All of this is configurable. We regularly get files containing over 2000 Proof of Delivery Notes or ePODs and our systems sort and match these to invoices so when customers receive the invoice they have all the associated documentation to hand, either joined up in one document with the invoice, or a separate file. either way, completeness of invoice is critical to early payment in many industries. This is something we are passionate about. Find out more about this in this short video: Watch here
4. Invoice Issuance – get the invoices out quickly
Dragging out the time between the order in and invoice out delays payment. Some of our clients send invoices the same day that delivery is made. Often the invoice is sent to both the approver and AP handler. The person that ordered and has use of the goods can action invoices and get the admin side of their job off their desk while quickly. It makes the Accounts Payable handler’s job easier when they don’t have to ask the approver to dig back through emails or paperwork for their copies of delivery notes, etc.
How We Help
Secure links are sent from Corrivo to invoice recipients. Those customers can click to view invoices wherever they are – the secure customer portals are mobile friendly and work well on phones, tablets and computers. For some clients, small business customers are the worst offenders at late payments and their finance teams are small. Recipients can approve invoices for payment on the fly and these can then be paid by their accountant or credit controller without delay. Of course, the key thing our software does for large enterprises is to get those invoices out quickly.
We can create thousands of invoices from an order file in minutes. The work of large teams of people can be done instantly, accurately and automatically in Corrivo. That’s why it is the first choice for large businesses from B2B to B2B2C and even B2C companies. We are the invoicing muscle power for them.
5. Invoice Layout
High query rates (over 2% of invoices) and allocations errors, plus anecdotal evidence from customer calls are a sign that your invoice layout could be better. Many people take the opportunity to redesign the invoice layout to signpost the important references, dates and figures when they move to Corrivo. Switching to paperless invoicing means you don’t have the worries about the cost of ink and paper so you can be more colourful and creative with designs.
How We Help
Even if your customers receive invoices by EDI and typically view invoices through the lens of their accounts payable system if there is an issue they’ll often visit your customer invoice portal to view their invoice in the ‘classic’ format – a human-readable document such as a PDF. We can help our clients rethink their invoice layout when they come on board with Corrivo or we can replicate it exactly.
In recent years many clients have used colour, gradients and tones and logos to create really attractive and well laid out invoices that make it easy to find the important data – don’t hide customer and invoice reference numbers if you want them quoted on payments: point them out! We can also help clients who want to use invoices as messaging vehicles for sales promotions. whether on the invoice or attached to an invoice, a note of upcoming promotions or seasonal messages can go a long way towards improving customer satisfaction.
6. Early Payment Incentives
It does not have to be a direct discount for early payment if there are offers against future orders that you can extend instead. This encourages payment and repeats ordering and loyalty. In recent times opinion is divided by industry on whether these should be abandoned to increase revenue, or added to increase cashflow.
How We Help
Credit notes, discount codes and other invoice value adjustments can be accommodated within Corrivo. It never fails to impress us what a variety of scenarios we encounter across different industries and clients – from bulk order discounts and promotional, short term offers to credit notes against deliveries that were rejected. We think we’re pretty good at configuring Corrivo to cope with the bespoke requirements of our clients. Our clients tell us this fact alone sets us apart from our competitors.
More recently we’ve created a solution that helps clients get paid on time or early without requiring them to resort to discounts and therefore revenue dilution. One of these new solutions is called Corrivo EPT – it offers our clients the opportunity to get paid on time by our funders while their customers are given more time to pay. It means they get a predictable turnover and cash flow with no dampening of their DSO or increase in aged debt. To find out more click here.
7. Easy Payment Methods
If your customers tend to pay via online bank transfer, signposting the correct references they can use will help you with your own payment reconciliations – at least it should encourage them to use the correct reference when paying you. If training customers into using reference numbers is not going so well there are two other key tools in your kit: Direct Debit and Online Card Payments.
Both have a software overhead but the costs don’t have to be high if you shop around. Card payments will cost you more per invoice than Direct Debit or Bank Transfer on a per transaction basis but we have found that card payments are an increasingly popular solution for business customers, as so many other things are now purchased by card online, that one more online card purchase to reconcile at their end poses no significant administrative overhead. Plus there are the air miles, payment guarantees and other pluses that come with card payments.
How We Help
We can integrate your card payment gateway with your customer invoice portal so customers can pay online when they first view their invoice, or on the spot when one of your team rings or emails to remind them of an outstanding amount to be paid. The additional benefits of this include the seamless integration with eCommerce / online ordering portals. Your customers can still pay upon invoice but can do so online in an entirely digital end to end experience.
8. On Account Deposits
Popular with professional services organisations, such as legal firms, but increasingly these are being used as a buffer in times when credit risk is evidently rising. You need to be sure that you can allocate a payment to an invoice or draw on an account deposit as needed.
How We Help
Whether paying by card or adding remittance advice, customers can select the invoices they wish to pay or part pay and these will be added to the list associated with either the card transaction or the remittance reference. So if a customer wants to pay the full invoice amount from their deposit and a card payment combined, they can let you know this in remittance advice that is automatically associated with one or more invoices. Some of our clients operate many brands under one group structure.
Their clients sometimes pay for invoices with both company A and company B within the group in one single payment. Our system can cope with this using the multi-level hierarchy features to support parent, child and group company structures or multi-ledger organisations. It sounds complicated, but our software makes what could be awkward extremely simple.
9. Late Fees or Late Payment Penalties
While a matter of policy for your organisation aimed at decreasing delinquency and DSO, the enforcement of these fees can be complicated. We find that few organisations today use these, as they tend to prefer the ‘carrot’ rather than the ‘stick’ and use our software proactively to create reminders processes that encourage prompt payment.
How We Help
Proactive reminders letters – before due dates, can be well worded, well-timed and automated. Some of our clients have to approve reminders letters before they are dispatched, but they have generated automatically, giving them a last chance to check invoice status or add in any new information before a reminder letter is sent. the Corrivo Collections Module allows customers to create custom chase paths for reminders and Dunning letters, including reminders, calls where needed. This module can be locked down for certain users or can be malleable to those empowered with creating specific Dunnings sequences for a specific segment. The level of refinement of precision involved goes a long way towards maintaining good customer relations – the letters can be less impersonal and more sympathetic if assigned based on certain criteria.
10. Stop Policies
Putting accounts on stop when a customer is close to or over their credit limit will prevent them from placing new orders. This is not the best way to get paid on time but it is an essential credit risk limitation tool.
How We Help
Our clients provide parameters for Stops. Accounts can be set up to go On Stop or Off Stop automatically or manually. These automatic Stops features give a sense of real-time alignment and allow for accounts to be on stop for the minimum amount of time until payments have been received. We help our clients synchronise systems to that they offer the best possible experience to customers – order in minutes of paying invoices if the credit limits have been exceeded.
11. Customer Service Focus
How are your CX, your DXP and your CSAT? Do they follow through to invoice payment? Customer Experience (CX) design from in-store to phone and online, Digital Experience design (DXP) across all digital channels including social media, and Customer Satisfaction (CSAT) are ever more important to retaining customers and fostering loyalty. This applies not just to customers but to employees. When your staff are engaged in helping customers, creating happy, satisfied customers and strong customer relationships, research shows they work harder and enjoy their jobs more. Empowering collections and dispute handlers to help customers in a more personal way will make both parties feel a sense of purpose and belonging. While it sounds qualitative, it is increasingly being measured metrically as there is a growing understanding of the relationship between satisfaction and profitability in business.
How We Help
One of the key benefits of Corrivo is the automation of mundane tasks. It frees up staff from repetitive chores by automating them and providing a smooth, neatly organised and prioritised workflow that allows employees to feel in control and better able to focus on customer relationships and analysis of data to identify improvements to working practice. Corrivo helps credit managers feel part of the virtuous circle of analysis, problem-solving, action and improvement.
