Controllers Council recently held a best practices presentation on Controller’s Guide to Automating Invoice Delivery & Collections, sponsored by Esker.
Esker is a global cloud platform built to unlock strategic value for finance, procurement, and customer service professionals and strengthen collaboration between companies by automating the cash conversion cycle. Founded in 1985, Esker operates in North America, Latin America, Europe, and Asia Pacific with global headquarters in Lyon, France, and US headquarters in Madison, Wisconsin.
Following are key takeaways to this discussion. If you are interested in learning more, view the full webinar archive video here.
Today’s Biggest Financial Operation Challenges
What’s putting pressure on controllers and finance leaders today? A few big things include:
- Financial reporting accuracy: guaranteeing the accuracy and timeliness of financial statements while managing tight deadlines.
- Data analysis and insights: extracting meaningful insights from large amounts of financial data to make informed, strategic decisions.
- Economic uncertainty: market volatility and global disruptions make cashflow forecasting more challenging.
- Manual and inefficient processes: outdated systems slow down invoicing, collections and cash application.
- High Days Sales Outstanding (DSO): slow collections leads to liquidity issues and missed growth opportunities.
- Poor visibility into receivables: lack of real-time data makes it difficult to manage cashflow proactively.
- Regulatory changes: compliance with evolving financial regulations can add unexpected costs and process delays.
- Customer disputes and billing errors: frequent disputes prolong payment cycles and hinder cash flow stability
Benchmarks for Best-In-Class Invoice Delivery and Collections Management
First, invoice accuracy rate, which is a barometer to reflect how many invoices are delivered without errors. Day sales outstanding, better known as DSO, is a barometer to gauge the average time it takes to collect payment after a sale. This is probably the most popular tracking that I hear out there, but the others are very important as well, such as Collection Effectiveness Index, CEI, which measures how effectively collections recover outstanding receivables over a specific period, and aging of accounts receivable, tracks overdue receivables and age buckets such as 30, 60, 90 plus.
Leveraging Automation to Improve Cashflow
So, leveraging automation is very important in improving cash flow. By automating invoice delivery, it promotes a faster invoicing cycle and eliminates delays. Automated reminders and escalation workflows improve collection rates. Real-time dashboards offer transparency into receivables and cash flow forecasts. Integration with ERP systems ensure data consistency and accuracy. Also, customers benefit from faster issues resolution and flexible payment.
Invoice Delivery
The typical ways companies are sending out invoices is manually via email or through their ERP, online portal, fax, postal mail, which can be very time consuming, hard to track and delay the process of your customers getting invoices and paying you on time. With an automated tool, companies can send invoices out by a pdf copy of the invoice and a link to the payment portal, but there is very little after set up that you will have to do, which frees up more of your time to be spent on other tasks internally.
Collections Management
There are 7 key things to keep in mind with a collections management tool:
- ERP Integration
- Collections
- Collaboration
- Dashboard & Monitoring
- Credit Risk Management
- Customer & Payment Portal
- Platform & Archiving
A collections management tool gives you the ability to diversify the ways you can reach out to your customers. Whether you want to reach out to individual customers, groups of customers or your whole customer base, an automation tool allows you to send out account statements, payment reminders, dunning letters and alerts you to which customers need to be followed up on.
Why Should Controllers & Finance Leaders Care about Invoice Delivery and Collections?
- Receivables impact liquidity: timely collections directly affect an organization’s ability to meet its short-term obligations and fund operations.
- Improved forecasting accuracy: efficient invoice delivery and collections processes provide Controllers with more reliable cashflow projections.
- Working capital optimization: faster collections reduce the need for external borrowing, saving on interest expenses.
- DSO and AR performance: If customers take too long to pay, the company’s cash flow weakens, making it harder to cover expenses. Collections performance impacts valuation, and investors and stakeholders assess AR aging and DSO trends to gauge financial health.
- Cost efficiency: Reduced DSO improves cash availability, minimizing reliance on costly credit facilities.
- Strategic decision-making: Enhanced visibility into receivables enables more informed capital allocation and investment decisions.
- Stronger customer relationships: Clear and timely invoicing improves customer experience, and proactive collections prevent friction.
- Enterprise alignment: Collaboration between AR teams ensures organizational financial goals are met.
Automation Benefits
First is improve cash flow. Faster invoicing cycle, automation ensures invoices are sent instantly, usually as soon as goods or services are delivered without waiting for manual intervention. Quicker payments means that the payment cycle starts earlier, resulting in faster payments and improved cash flow. Fewer errors and disputes, automated invoicing reduces human error and automatic data population ensures invoices are accurate, reducing the need for manual checks.
Second is faster collections and shortened day sales outstanding. Automated systems send reminders, follow-ups, and payment requests at optimal intervals, accelerating collections and reducing the time it takes to convert receivables into cash. Data-driven prioritization, automated systems segment and prioritize overdue accounts based on risk, payment history, and amount owed, enabling teams to focus on high-impact cases first.
Third is cost efficiency reduces overhead costs. Automation reduces overhead costs by minimizing manual tasks, allowing credit and collections teams to focus on high value activities such as resolving disputes or managing complex accounts, timely payments. Automation encourages timely payments, reducing the need to offer early payment discounts or waive late fees as incentives, and enhancing visibility and control.
Fourth is real-time tracking of invoices and payments. Automation provides a centralized dashboard to monitor real-time status updates for whether an invoice has been sent, viewed, disputed, or paid. And integration with ERPs ensures seamless tracking across multiple departments. What’s not on here and sometimes not tracked is job satisfaction. A lot of times more job satisfaction, happier customers, and the ability to grow relationships with your customers.
Other benefits include guaranteed 24/7 solution availability without the need for complex or expensive infrastructure. Everything’s in the cloud in a hosted tool. And it always keeps your solution up to date. are needed and no allocated time or resources required. It’s done automatically.
To learn more about automation in financial operations, download the full webinar here.
ABOUT THE SPONSOR:
Esker is a global cloud platform built to unlock strategic value for finance, procurement, and customer service professionals and strengthen collaboration between companies by automating the cash conversion cycle. Founded in 1985, Esker operates in North America, Latin America, Europe, and Asia Pacific with global headquarters in Lyon, France, and US headquarters in Madison, Wisconsin. Visit https://www.esker.com/ to learn more.
