Managing receivables is one of the most important parts of any business. One wrong move and you’re dealing with unhealthy cash inflows and missed or delayed payments. Whether you’re a CFO thinking about financial strategy or a controller focused on managing internal controls and processes, it’s important to keep your Days Sales Outstanding (DSO) to a minimum.
One way NetSuite users are reducing DSO by 30 to 70% is by taking advantage of SuiteApp payment integrations like Paystand that make the receivables process nearly effortless. Usually, you would need to hire multiple vendors to do this, but Paystand takes it one step further and helps you automate invoicing, collections, processing, reconciliation, forecasting, and more.
There are a lot of actions you can take to see payment times drop from weeks to days. Here are 6 ways you can reduce your DSO by streamlining your A/R processes through NetSuite.
1. Automate A/R Processes
To effectively reduce your DSO, it’s crucial to have an efficient invoicing and collections process.
Although most companies use NetSuite to manage invoicing, the process is still highly manual and labor-intensive. Because of this, controllers often spend a lot of time looking for customer information, updating spreadsheets, fixing human errors, and executing other low-level activities when they could be communicating with customers, settling disputes, and focusing on other activities that can reduce your time-to-cash.
Manual A/R processing is inefficient and costly. By implementing Receivables Automation, you can improve cash flow while reducing your operating costs and improving your overall customer experience.
You can eliminate repetitive processes and handle a larger volume of invoices without adding any headcount. A cloud-based payment solution like Paystand can help you invoice your customers instantly and make your collections process easier without any extra work. The faster you invoice customers, the quicker you put cash back into your company.
Recommended Reading: Top 5 Payment Solutions for Automating Accounts Receivable
2. Offer More Payment Options
Another way you can quickly reduce DSO is to make it easier for customers to pay you by offering multiple payment methods.
This provides greater flexibility for customers while helping shift away from less convenient options like paper checks. One of the reasons we shy away from the term “eCheck” at Paystand is because the term “check” feels like a slow, legacy transaction that can delay your time to cash by days or even weeks because of the mailing process.
That’s why we created the Paystand Bank Network. By partnering with more than 18,000 banks, not only do we make it easier for your customers to do business with you, but we also offer Zero-Fee payment rails which allow your customers to skip expensive transaction fees altogether.
Even if most of your customers still use paper checks or ACH, accepting alternative payment options can help your organization stand out in an increasingly convenience-driven world.
Recommended Reading: The Controller's Guide to B2B Payment Optimization
3. Embed Payment Links Into Invoice Reminders
As frustrating as it sounds, you’re always going to have a percentage of customers that don’t pay their invoices on time. Sending reminders when these accounts become overdue is another key part of keeping DSO low.
Usually, a friendly follow-up email or two is all you need to get these accounts back on track. Late payments happen and they’re not always intentional. A simple follow up can help you fix these situations while keeping your working relationship with the customer on good terms.
But the real game-changer is when you take the human element out of the equation and start automating these reminders. NetSuite users love combining the power of Paystand’s bank network with our receivables collection engine to let customers make payments directly from the invoices, emails, and reminders they receive.
And that’s the key: making it easy for customers to pay immediately. By regularly reminding customers to pay and removing friction from the collections experience you can fast-track your time to cash.
Recommended Webinar: How to Integrate Payments Directly in NetSuite with Paystand
4. Review Customer Payment Terms
Your payment terms set the bar for your customers’ payment behavior. While you definitely want to have a policy that ensures you get paid as soon as possible, making your terms more customer-friendly may be a more effective way to cut your DSO.
However, this doesn’t mean you should jump the gun and extend the time that customers have to pay an outstanding bill. Get creative, consider offering early payment incentives or rewarding customers who consistently pay on time with discounts or early access to new products, features, or services.
This works best when you remove any confusion around when invoices should be paid. You can do this easily by stating your terms visibly at the bottom of invoices and payment reminders.
5. Use Personalized Collection Plans
Another way to drastically cut your DSO is to get strategic about how you follow up with customers about missed or delayed payments.
Using intelligent automation features, you can use your payment software to stay ahead of the monthly collections process through personalized plans. This allows you to assign the frequency and tone of communications based on a customer’s risk profile, increasing the effectiveness of outreach by letting you coordinate communication workflows based on categories, payment terms, type of receivables, payment history, and more.
This is something our customers love because they can apply a greater focus on getting delinquent accounts back on track, while actually decreasing the amount of time and manual effort required to make it happen.
Recommended Webinar: Making Payments a Strategic Advantage in 2019
6. Eliminate Risky Customers
No one wants to turn their back on customers, but managing risk is a necessary part of business.
Clients that regularly pay invoices late or forget to pay them at all are not great customers to do business with. DSO increases are often driven by a few large customers. It may hurt to drop a client in the short-term, but over time you’ll save countless hours spent on chasing down their payments.
Look out for clients who are routinely inconsistent or unresponsive. If you find that an account continues to slide off track despite your best efforts to set them up for success, then it might be time to reevaluate your working relationship.
You're better off directing the time and effort spent chasing down these repeat offenders towards client acquisition and better servicing existing customers.
NetSuite users have multiple options available to them to reduce DSO and strengthen their cash flow.
Using intuitive payment solutions like Paystand can help you get paid faster, automate manual-driven processes, and even turn routinely delinquent accounts into your most reliable customers.
If you would like to learn how you can automate your accounts receivable through NetSuite’s ERP platform and start cutting DSO by up to 30-70%, contact our experts at firstname.lastname@example.org or call us at 1-800-708-6413.