ACCOUNTS RECEIVABLES: A CFO LENS!

ACCOUNTS RECEIVABLES: A CFO LENS!

What CFOs Should Focus On in Accounts Receivables 

1. Strategic Cash Flow Management

  • DSO Optimization: Monitor Days Sales Outstanding (DSO) to identify trends and take corrective action.
  • Cash Flow Forecasting: Integrate AR data into broader cash flow models to improve liquidity management.
  • Collections Strategy: Set high-level policies for collections and align them with the organization's risk appetite.

2. Customer and Credit Risk Management

  • Credit Policy Oversight: Define and refine credit approval processes based on customer risk profiles and market conditions.
  • Customer Segmentation: Analyse AR data to segment customers by payment behaviour and profitability, enabling targeted strategies.
  • Bad Debt Management: Identify patterns of delinquency and create strategies to minimize write-offs.

3. Technology and Automation

  • AR Automation Tools: Invest in platforms that automate invoicing, payment reminders, reconciliation, and dispute management.
  • Data Integration: Ensure AR systems integrate with ERP and CRM tools for seamless data flow and actionable insights.
  • AI and Predictive Analytics: Use AI to predict payment delays, identify risky accounts, and guide decision-making.

4. Policy Development and Governance

  • Payment Terms Standardization: Create policies for payment terms that balance customer satisfaction with financial stability.
  • Escalation Protocols: Define clear escalation paths for disputes and overdue accounts.
  • Performance Metrics: Establish AR KPIs like collection effectiveness index (CEI) and monitor them regularly.

5. Stakeholder Communication

  • Cross-Functional Alignment: Collaborate with sales and customer service to align AR strategies with broader business goals.
  • Investor Updates: Provide AR performance data in investor presentations to demonstrate financial health.

6. Vendor and Partner Relationships

  • Third-Party Collections: Evaluate and manage relationships with third party collection agencies.
  • Payment Gateways: Select and oversee the implementation of payment gateways to enhance the customer payment experience.

What Shouldn’t Pull CFOs Down in Accounts Receivables 

1. Routine Collections and Follow Ups

  • Customer Reminders: Automate payment reminders and follow ups via email or SMS.
  • Collections Workflow: Delegate collections activities to the AR team or third-party agencies.

2. Invoice Creation and Delivery

  • Use invoicing software to handle invoice generation, validation, and distribution.

3. Payment Reconciliations

  • Automate the reconciliation of payments to invoices using tools that support bank integrations.

4. Dispute Resolution

  • Implement self-service portals where customers can raise and track disputes, leaving only escalated cases for the CFO’s attention.

5. Reporting and Data Aggregation

  • Delegate the preparation of AR reports to finance analysts and ensure systems generate real time dashboards for instant access.

6. Manual Credit Assessments

  • Automate credit risk evaluations using machine learning models that consider historical payment patterns and external credit data.

To see AR Automation in action, book a demo – sandeep@inebura.com

Author

Sudarshan Banerjee
Sudarshan Banerjee
Inebura , Head of Product & GTM

Sudarshan Banerjee is a Product, Process and Automation professional. His areas of interest include Sales Force Automation Tools, Sales Process Construction, Data Science, Data Analytics, Statutory Audit and Compliance, Project Management and Change Management.

He has over 19+ years of experience in Business Development, Sales, Process Planning, Business Strategy and Product Development spanning across various domains namely ITeS, FMCG,Financial Services, Travel& E-com.

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