How SMS Improved The Order-to-Cash Cycle by 40% with A/R Automation

Automated Accounts Receivable CollectionThere are many factors and layers that impact an organizations ability to quickly convert a quote to an order, an order to an invoice, and an invoice into cash. Some of the ways you can increase your order-to-cash cycle are more complicated than others, but a few of them are simpler than you might think. Believe it or not, invoice collection, is one of the easier areas to improve; All you need is the right tool for the job. Here is a story of one customer who was able to improve their days sales outstanding (DSO) by 40%, speeding up their order-to cash cycle  by 27 days!

The Problem:

Systems Maintenance Services (SMS) has a credit department spread out across three different states which created data silos, slow processes, and even slower invoice collection. Despite the hard work and experience of four full-time collectors,the company was still struggling to manage their accounts receivable due to ERP system constraints and numerous process inefficiencies, “with more than 2,000 customers and over 3,000 invoices monthly, we needed a better way to manage our outstanding receivables,” said Systems Maintenance Controller Steve Defenbaugh.

The Solution:

SMS implemented Anytime Collect to enhance the A/R module of their Sage 100 ERP system to bring all of their information into one system that their entire credit department could access, ensuring the information they are working off of is always up-to-date. “We selected Anytime Collect because it allows us to centralize all credit and collections information with instant access to current account agings, invoices, and payment history.  Additionally we have CRM-like capabilities to document phone calls, email communications, and other related collections activities,” explained Defenbaugh.

The company even uses Anytime Collect to keep their sales team informed about customer credit information, another proven way to improve the order to cash cycle time.

“It is very important to have a centralized location for credit and collections information because we are also providing access to Anytime Collect to our 50 sales reps for their assigned accounts. This allows them to see what’s going on with their accounts and helps them work with us to resolve disputed invoices related to incorrect  contract pricing or other issues.” said Defenbaugh.

The Results:

The software was implemented immediately and SMS saw a return on investment right from the start. “Anytime Collect provides our credit managers and collection reps with more information than we’ve ever had before providing the insight we needed to act, instead of react to outstanding accounts. We’re now able to attach PDF copies of invoices and statements to emails and to create reports and mass-mail documents directly from the system. Anytime Collect helped us shorten the sale-to-cash cycle time – something that’s incredibly important to our organization,” said Defenbaugh.

Man power was not what the company lacked, they just lacked the proper tools for efficient credit and collections which is why invoices were paid late and the order-to-cash cycle was so long. In fact, they were able to take one of their full time collectors and reallocate 50% of their time to more critical tasks.

In the first year they saw amazing results, including:

  • A reduction in DSO from 67 days to 40 days- That’s a 40% reduction! The company is now getting paid 27 days faster than the previous year – almost a full month faster!
  • In their first year after implementing the software, the company continued to grow, adding another 1,000 customers without expanding its staff to keep up with the additional invoices.
  • The company was able to reallocate half of one employee’s time to other, more critical business activities.

Here from SMS themselves in the video below:

collection email

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