Three things distinguish best-in-class B2B accounts receivable (A/R) capabilities from the rest of the pack: speed, cash automation and capital management.
Making headway in key areas of Accounts Receivable (A/R) was difficult during the Covid-19 downturn, but with organizations returning to a pre-pandemic work level, A/R is back in the spotlight. So, how should A/R teams be assessing their current A/R performance against industry peers?
One way to gain some clarity on that matter is by asking the following five questions to benchmark your company:
- How often do we lose customers during onboarding?
- How often is the sales team involved in non-sales activities?
- Does the volume of customers’ distinct invoicing and billing requests pose challenges?
- How frequently are payments misapplied?
- Which way is DSO trending?
With these questions in mind TreviPay surveyed 200 Europe-based B2B corporate finance and A/R executives to learn more about their A/R goals, pain points, improvement priorities and processes. The findings suggested there is still significant room for improvement when it comes to onboarding speed, capital management and automation. These three things distinguish best-in-class B2B A/R capabilities from the rest of pack.
More than one-third of responding A/R teams report that it takes an average of four or more days to onboard new customers.
Working capital management impacts
Out of the responding organisations 43% report relatively high Day Sales Outstanding (DSO) of 31 to 45 days; with 38% reporting DSO of more than 45 days. Bad debt write-offs also represent an A/R pain point with nearly one-third of responding companies annually writing off more than 11% of their receivables as bad debt.
More than 92% of respondents report they manually input data into their A/R systems, 21% of respondents identify paper checks as the most frequent payment method, and 11% still rely on traditional mail to send invoices to customers. Almost half (46%) of the survey respondents report they set aside work on the automation of manual processes due to the pandemic and its many business challenges.
Companies leading the way in A/R performance onboard customers quicker, support organisational working capital management objectives more effectively and deploy advanced automation to minimise manual activities.
As the external environment continues to improve, companies committed to enhancing their A/R automation should be able to resume progress on those objectives. The answers to the five key
self-assessment questions should sharpen awareness of the scope and provide valuable insights to making improvements to elevate your A/R performance.
Download our report to find out more about B2B A/R Performance in Europe.