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Globys Research

A strategic perspective on invoice-to-cash

PAST DUE: Why your enterprise invoicing is killing your cash flow

Topics: Billing Experience, Billing Portal, E-Billing

Do you ever wonder if your enterprise customers even read the giant ‘due date’ listed on their invoices?  If you’re like most usage-based service providers, more often than not, the number of payments coming in late far exceeds those coming in on time – and this represents the majority of your business revenue.

Beyond the frustration and constant follow-up from your billing and account teams, this growing and seemingly inconsistent days sales outstanding (DSO) trend is having a significant impact on your bottom line. The cash is floating in an unpredictable state, making it impossible to evaluate and forecast your company’s performance with any sense of accuracy.

So why are your enterprise customers delaying their payments to you? Is it lack of funds? Overlooked invoices? Withholding out of spite? Nope, none of the above. It’s all about the invoice itself.

Think from a consumer’s point of view. You receive your invoice, whether it be paper or online, validate the charges and make a payment. Simple, and often times, automated.

But as you know, the enterprise invoicing experience is far more complex. Your enterprise customers have hundreds of accounts, charging across a slew of products and services, being consumed by thousands of employees. Not only does this produce a heap of invoices, but a mountain of associated data – which has to be reviewed, allocated, shared, and validated – every single month.

For many, the invoicing experience is completely misaligned to what their enterprise customers actually need to bring any level of efficiency to this process. So in turn, the expectation of the ‘due date’ is thrown out the window.

This becomes obvious when we look at the average DSO for enterprise invoicing. A paper bill comes in at an average of 75 days. And although online invoicing offers the promise of faster review and payments, most companies still report an average of 60 days – an improvement but still far from ideal. And then of course, there’s that ‘special’ group of customers who we’re all familiar with, who repeatedly take the concept of late payment to the extreme, like the 180+ day extreme.

So where’s the disconnect? Surely you can relate to some, if not all, of the common DSO dingers highlighted in the infographic below. You’re not the only company who delivers invoices AFTER the stated due date, yet still has a goal around lowering DSO. See the problem here?

And what about how the invoices are actually presented? Even with the move to online invoicing, there’s still a wide gap between what the customer actually needs to validate and pay, and what they actually receive.

Multiple invoices, multiple portals, no consolidated view, no easy way to find specific information (like why did an employee’s data charges sky rocket this month?), no way to allocate or share the information. All of these rank high in the ‘why my payment is late’ conversation, which can often lead to a ‘why I’m looking at other providers’ conversation.

Payments are not just a tactical process – they’re a key health indicator of your customer relationships.

Do you provide the right information for customers to pay on time?

Do customers trust the invoicing data enough to automate the payment process?

Has your data been directly integrated into a customer’s operations, making them dependent on the value you provide?

Rethink what your customers need from you in order to bring efficiency to their review and payment process, and in turn, improve the predictability of your cash flow.