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Tuesday July 20, 04:07
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Corporations Benefit By Unlocking Working Capital
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Corporations with proactive working capital management solutions improve their cash flow by reducing the incidence of late payments, improving collections and harnessing the availability of transaction data, according to GT News.com. Exceptions and errors, as a primary cause of late payments in the B2B sector, cause invoices to fail the customer’s three-way AP reconciliation test and trigger high DSOs (Days Sales Outstanding) rates. Since significant revenue leakage is caused by inadequacies, the auto-detection of errors and exceptions early in the quote-to-cash cycle can decrease problem invoices by up to 90 per cent.
Stronger business controls for pricing, discounting, blanket POs and invalid PO numbers reduce the scope for errors or exceptions on invoices, which in turn eliminates revenue leakage from incorrectly applied discounts and adds millions in annualized returns to a company’s bottom line. Enterprises running software on existing ERP and legacy systems instead of building additional silos most easily access data already in these systems, while achieving solid returns from reducing their DSO rates. With 18 to 35 per cent of outgoing invoices at a typical Fortune 500 company failing the customer AP reconciliation test, ‘neutralizing’ inefficiencies in the quote-to-cash cycle is the most effective way to cut DSO and free up working capital.
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