The classic challenge as a wholesaler or distributor is getting product out the door and where it needs to go. This is what you do best. Your business is built around this.
However, the new challenge of today is that for some of you, demand has spiked to levels you cannot support, and for others, your business has dropped - according to a recent Institute for Supply Chain Management survey, nearly 60% of respondents have experienced a decline in operations, and that decline is 50% or more of “normal” operations
Likely, increasing growth and accelerating cash flow is all you’re thinking about right now, regardless of which side of the survey you’re on.
Why AR matters now
Accounts Receivables might not be the first place you look when it comes to your business growth or disaster recovery planning, but it should be in the top three. Ineffective AR processes impact your business success, no matter how great your product and logistics are.
And there are things you can do now to ensure your business is in a better position to handle what’s coming next as we slowly reopen the economy. We may never go back to “normal” but there is no reason your business can’t be in the best possible shape to forge its new, profitable future.
Three things you should do now:
- Cut the costs out of your processes. For many wholesalers and distributors, invoicing and payments is still a manual process. Paper invoices are printed and mailed. These invoices then have to be opened, recorded and placed in a queue for payment. All of this takes time - which extends your payment cycle - as well as manual effort. Automation of your process, combined with electronic invoicing and payments, can reduce the cost of managing the paper invoicing/payment process from an average of $15 per invoice to less than $3 per invoice. By automating repetitive processes that you once had teams of people spending hours doing, you can now reallocate those resources to actively bringing money into the business, not shuffling papers.
- Get a clear view of your working capital. Things have changed so much in the past 90 days, that unless you already have a single dashboard view into your entire credit-to-cash process, a clear view can be difficult to ascertain. Forecasting your cash flow is important to know what you’re working with, where you can afford to invest in growth, and where you might need to cut back. Getting to a reliable and predictable number is a challenge when your customers are behind on payments and you can’t see who’s late and by how much. A single AR platform that pulls together data from your various systems (ERP, CRM, and billing applications) will allow you to quickly determine where your team needs to focus their time when it comes to managing the business cash flow, and will give you the transparency you need to understand where you business really stands.
Additional benefits of a smart, single AR platform is that your customers also get transparency. They can access their invoices, their payment history, and make payments on their time. This means they spend less time tangling up your team in their simpler challenges (eg. getting a copy of an invoice) and have a higher likelihood of paying on time. It’s a far more positive customer experience.
- Revisit your payment options. Flexibility is a key strategy to review today. If you’re facing challenges with your business right now, it means everyone in your supply chain is also impacted. How do you work together for the benefit of the entire ecosystem? Payment flexibility may mean offering new or different channels for payment - for example, if you haven’t offered ACH in the past, or credit card payments, now might be time to consider that. Also, you may need to adjust your payment structure, particularly to accommodate those customers who have been good over the years and whose relationships are important to maintain. If you understand what challenges they are facing, you might be able to come to a mutually beneficial agreement that keeps your cash flow moving in a positive direction - for both of you.
Today, every business needs to think about how they are using technology to be accessible, to manage customers, and to ensure cash flow. If your AR system is not a smart tool for your AR team, investing in one now isn’t counter-intuitive: it’s necessary. In today’s difficult climate, you can’t afford to let your business continue to fall behind, especially when there are tools that have a proven ROI and can help you get through today and carry you ahead to a brighter, albeit different, tomorrow.
YayPay offers smart tools for smart AR
We simplify the AR process with one platform, one system, one code base. Our cloud-based solution utilizes advanced machine learning to drive a 3X improvement in productivity for AR teams. YayPay’s automated communication workflows allows your AR team to interact with more customers, with less effort, and focus on priority accounts that produce positive cash flow. YayPay integrates with many accounting, ERP, billing, and CRM applications, giving you a complete and accurate look into the collections process to help you better predict cash flow and increase revenue. Our proprietary predictive analytics engine identifies credit risk and reduces the potential for revenue losses, driving smart business decisions.