What are the main reasons your customers don’t pay their invoices on time? Many of our clients’ customers have stated that over 70% of the time, they pay late due to issues related to the actual invoice.
With this in mind, ask yourself a couple of simple questions:
- Have you checked the effectiveness of your organization’s invoicing process?
- When you send invoices to your customers, are you sure the invoice is getting to the right person or location?
- Does the invoice contain accurate information and data?
While you might have an amazing collections strategy, a highly-experienced team, and the best and most up-to-date technology, billing and invoice issues can still cause you to have a less than perfect past due receivables performance.
All too often, the reason why a customer didn’t pay an invoice is because they didn’t receive it in the first place. The invoice may have ended up in the wrong location or didn’t go to the accounts payable team, approver, or even right email address. If your accounts receivable master data isn’t correct, or the invoice price, product, or service has had issues that haven’t been addressed, this can put the brakes on the review and approval process for that particular invoice.
Here are three steps you can take if you have a sneaking suspicion that invoicing and billing might be negatively impacting your collections processes:
- Track your billing quality – there are lots of ways to track and improve billing quality. You can start by implementing dispute and non-payment reason coding to track and reduce the frequency of invoicing and billing issues
- Ensure your invoices are going to the right place – check the validity of your accounts payable contact information in your system and make sure you keep it up to date. Instruct your collectors to confirm the correct contact information and that invoices are going to the right place when they call late payers
- Implement an early alert system – create a queue for returned emails and e-invoice email bounce backs. Focus your team’s effort on correcting incomplete master data and fixing issues from one month to the next, enabling you to have a good account payable contact and correct invoices.
Sounds simple, right? And I haven’t even mentioned robotic process automation (RPA), blockchain, electronic data interchange (EDI), or any other of the cool technologies available to fix billing and invoicing issues. I was tempted to write about how self-service portals and other automation can drive big transformation of your finance functions, but it’s much better to start with a solid foundation before automating. To paraphrase Bill Gates, automating inefficient processes will only magnify that inefficiency.
At Capgemini, we apply our Digital Global Enterprise Model (D-GEM) architecture and ESOAR (Eliminate, Standardize, Optimize, Automate, Robotize) transformation methodology to identify the short, medium, and long-term initiatives needed to help transform your order-to-cash (O2C) process.
Start simple – apply these three steps to achieve quick wins within your credit and collections process.
Read other blogs in this series to learn more about:
- Learn about successful accounts receivable collections in ten easy steps
- Four Key Components to Writing effective credit-to-cash emails
- Pipefy – transform your collections email & processes
- Improve your order-to-cash process in a few simple steps
Learn more about how Capgemini’s Finance Powered by Intelligent Automation offering helps you navigate the myriad of products, tools and services, enabling your business to benefit from an intelligent solution that combines automation, digital platforms, know-how and insight.
Caroline Schneider has been delivering and designing O2C solutions for clients for over 20 years. She is passionate about delivering solutions to clients to maximize their working capital through technology, automation, and industrialized process design.