The business cash cycle and the importance of managing the key elements of working capital remain a top focus of successful companies. While payments technology and effectiveness have gained the lion’s share of attention and investment during the technology surge of the past several years, receivables management capability is a major component of cost efficiency, cash flow effectiveness, and client satisfaction. Since it is also one of the more difficult parts of the cash cycle to influence, forward-thinking companies and their financial service providers should be taking a close look at prioritizing this important series of processes and supporting technology.
In a new research report, Improving Receivables Management: Ignore at Your Own Peril, the author discusses the importance of receivables technology investment, the latest trends, and vendors driving change in the space. Digital technology adoption is creating opportunities for banks and their clients to find more effective methods to improve collections cash flow through payments processing efficiencies.
"Of the three cash conversion cycle components with an impact on working capital, the average collection period, ACP, is a more difficult lever for financial managers to pull than changing either inventory conversion time frames or days payables due (DPD) because it is highly dependent on buyer behavior, which can be influenced to varying degrees but not controlled," commented Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service and author of the report. "But the choices around the types of technology utilized in reducing ACP are controllable. It should be considered a strategic effort involving actions and systems capabilities designed for long-term cash management effectiveness."
Highlights of the report include:
- A discussion of the ongoing global challenges regarding average collection periods and reasons that receivables investment makes sense
- Analysis of real corporate data to identify free cash flow benefits of improving receivables management.
- A review of the technology now gaining in adoption, such as integrated receivables capabilities
- Detailed benefits associated with the components of improved receivables technology
- An overview of vendors providing solutions across the receivables management space.
1. Executive Summary
3. Prioritizing Receivables
- Collections Is Not Easy
- Receivables and the Cash Conversion Cycle
- Receivables Efficiency = Reduced Cost, More Cash, Better Relationships
- Data Helps
4. Receivables Solutions
- Remote Deposit
- Electronic Bill Presentment and Payment
5. Integrated Receivables
6. Integrated Receivables Case Review
7. Receivables Technology Providers
List of Figures and Tables
Figure 1: Past-Due Invoice Payments Are Globally Commonplace Indicating DSO Opportunity
Figure 2: Receivables Efficiency Directly Impacts Cash Flow
Figure 3: STP Is Lacking in the Diverse B2B Payables/Collections Space
Figure 4: Integrated Receivables at a Glance
Table 1: Vendor Sampler for Receivables Management Technology
- ACI Worldwide
- Alliance Payment Solutions
- First Data Corp
- Jack Henry
- US Dataworks
- Wausau Financial Systems