Prevention is better than cure – how to immunise your business against late payment
The responsibility for achieving on-time invoice payment rests with the finance department. It is a serious business! Our client, a leading healthcare services supplier to pharmacies across Europe, put in place these prevention measures to reduce the incidence of late payment across their business. Some cases do crop up, but on the whole, the rate of late payment has reduced to a new low that has radically improved the company’s financial health.
Send original invoices electronically.
Portal based invoice collection is the number one method. The majority of customers are happy to swap to this method from paper or PDF attachments. They receive an email notification containing a secure link to a branded portal where their invoices can be viewed or downloaded. EDI has a growing role since public sector bodies, including hospitals and medical centres, are following the European digital economy strategy and are gradually making more and more use of PEPPOL standards. PDF attachments to emails also have a place for some customers, but mostly as a backup method or for copy invoices. You can send the original invoice to the accounts payable team in the customer organisation (via a portal) and send a copy to the approver or person who placed the order – or simply send both a link to a portal.
Redesign your invoice layout
Combine invoicing best practices with design to create easy to read invoices. This ensures that recipients can see, at a glance, the important elements of an invoice. This simple intervention can virtually eliminate cases of invoices being rejected and can bring down the number of queries raised to manageable levels.
Reduce paper invoicing to the bare minimum
Most customers are happy to move to eInvoicing. Just because they have always had invoices on paper from you does not mean they wish to continue. By retaining paper invoicing only where the customer insists has meant that the average time from invoice to cash has shrunk by 4 days. This has had a beneficial effect on DSO and the workload of the collections team, who now have fewer overdue invoices to chase.
Call clients that have not retrieved their invoices within 5 days
For this to work, you need to be able to track invoice status. Corrivo shows you which customers have been notified but have not viewed our downloaded their invoices. It is obvious, but you can be sure that if they haven’t seen the invoice, they won’t be paying it. Friendly reminder calls ensure you identify issues that could cause the invoice to go beyond terms – for example, a change of contact details for the customer or long term sickness that causes the invoice to go unattended.
Being prepared for change
As suppliers to the NHS, our client knows that an increasing number of their customers will be switching to electronic invoicing in the two years following the NHS procurement strategy. With Corrivo, they can swap the customer to any delivery method easily and ensure business continuity for their own Accounts Receivable function. All their invoices are managed from one platform, irrespective of the way they are delivered, so they benefit from economies of scale, ease of reporting and improved compliance, and the customers changing needs can be accommodated easily.
To find out about other late payment prevention measures our clients use, sign up for a short demo, and we will show you how the system enables Accounts Receivable and Credit Control teams to deliver invoices the way Accounts Payable teams want them.
