HVAC Equipment Distributor Reduces DSO by 30% with Microsoft Dynamics GP Accounts Receivable Automation

Headquartered in Little Rock, Arkansas, Airetech Corporation is a single source supplier of commercial and industrial HVAC equipment. With more than three decades of experience, Airetech provides over two dozen nationally recognized brands to customers including commercial sheet metal and mechanical HVAC contractors, industrial and commercial building owners, mechanical consulting engineers, and architects. With annual sales of over $35 million, the organization has proven itself as a leader but despite the company’s success, they still fell victim to one of the most commonly recognized struggles of a distributor— getting paid on time.

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HVAC Distributor Hot Over High DSO

In spite of the NET 30 terms outlined in their contracts, Airetech’s average days sales outstanding (DSO) was 60 days, meaning customers were taking twice as long to pay as the agreed upon terms! With late payments slowing cash flow; over $4 million tied up in outstanding receivables; and the pressure to pay their own suppliers on 30 day terms; senior management decided it was time to re-think the way they handled collections.

Reactive Collections Leads to Late Receivables

Prior to implementing Anytime Collect, Airetech’s collection strategy was built on aging reports and the basic receivables tools within their Microsoft Dynamics Great Plains system. Due to the lack of automation and advanced A/R functionality within their ERP system, employees were left with no other choice but to manage the process manually.

Every other week, the collector’s would print aging reports from MS Dynamics GP and beginning with the back pages, start calling customers and manually sending paper statements and invoices.  The process would start all over again two weeks later if payment still was not received.

“Our invoice collection strategy was very reactive and collection calls were usually concentrated on invoices that were already past due, not on invoices that could potentially be collected within terms by contacting customer,” said Martha Capps, Airetech’s Business Manager. “We were always scrambling to catch up on overdue invoices. We knew it was not the most effective way to manage the process, but we didn’t have the time or staff to do it any differently.”

On top of time-consuming manual processes, sales managers in satellite offices were making their own phone calls about invoices which only created bigger problems.

“Their intentions were good,” said Capps. “The sales team wanted to ensure that customers were being treated courteously and that collection misunderstandings did not jeaporidize future sales. Unfotunately their disconnected collection efforts led to much larger problems for the company financially. For example, we had a $45,000 sale on a US government project that was never paid by the sheet metal contractor and a project for a national retail store remodel that was never collected.”

The Search for a Solution

“I knew we needed something that would work with our Great Plains system and automate the delivery of statements and past due notifications, which we identified as both our greatest weakness and largest opportunity for improvement,” said Capps.

“I researched available tools and software but found very few options that offered the integration we needed and were designed specifically for b2b businesses, not collection agencies. Our IT administrator and I agreed that Anytime Collect was the most user friendly application we could find and we were very impressed with the level of functionality we got for the price.”

Anytime Collect extends the basic A/R management functionality in Airetech’s ERP system to automate, simplify and streamline the entire processes. With Anytime Collect, Airetech can automate payment reminder emails, prioritize collection activities, archive customer email conversations, centralize all critical account and invoice information, automatically schedule follow up activities, manage disputes, track performance metrics, and more.

Faster & More Accurate Reporting

Today Airetech has designed new procedures built around the automation and reporting features within Anytime Collect. The system has replaced error-prone manual processes and collectors finally have the information and tools they need to be more efficient and effective in their daily activities.

“Our ability to sort invoices and create reports was incredibly limited before, not to mention an overwhelmingly tedious and error-prone process. Anytime Collect gives me the information I need to prioritize my acitivities and quickly create reports to ensure that every invoice is followed up on in a timely manner. Plus, the scheduled reminders allows me to call a customer back in a few days or a week to ensure nothing slips through the cracks. All of this means less time working in spreadsheets and gathering information, and more time to call customers, answer questions, and settle disputes.”

Increased Productivity

Having replaced cumbersome manual processes with Anytime Collect, Airetech collectors have reallocated time and energy away from administrative tasks to focus on more strategic ones. For example, collectors no longer need to spend time mailing paper statements, invoices, and collection letters to customers when they can be scheduled to go out automatically via email.

“Now we can send monthly statements via e-mail from Anytime Collect and it’s proven to be extremely helpful,” said Capps. “What had previously taken a person a full morning to print, fold, stuff and stamp can now be accomplished in just a few minutes! The ability to attach communications and documents to the email is also a huge time saver!”

Anytime Collect allows users to automate email for customers based on pre-defined rules and email templates with the option to attach a PDF copy of the invoice in question to ensure the customer knows exactly which invoice is being referred to. Users may also attach supporting files such as bills of lading, proof of delivery, employee timesheets, etc. The system automatically retrieves and stores email repsonses from customers, tagging the original credit issue to give collectors and credit managers a complete picture of customer communication.

“The automation in Anytime Collect has given our collectors exactly what they needed – more time,” said Capps. “It’s amazing to see all that can be accomplished now that the many time-consuming repetitive steps in the collection process are being taken care of automatically.”

Improved Communications Inside & Out

“One of the most important aspects to any accounts receivables strategy has to be communication and we simply did not have the time to devote to consistent communications before – now we do with Anytime Collect,” said Capps.  Once Airetech was able to become more proactive about communicating with customer through automation collectors had more time to call customers to follow up on recently sent invoices, ensuring invoice receipt and giving customers a chance to ask questions and clear up any issues that might delay payment.

Further, Airetech’s customers were quite responsive to the automated email statements which resulted in faster invoice collection. “I found that we got immediate feedback from customers who would shoot back a question or comments on invoices as soon as the statement was received in their inbox,” explained Capps. “This really openend up our lines of communication with our customers, resulting in much quicker payments and improved our customer service capabilities.”

Communications with customers were not the only ones to improve noted Capps, “being able to add and store invoice notes with the system and send progress reports to other users has been hugely helpful to eliminate costly miscommunications and speed up the data exchange between departments.”

Airetech has licenses not only for collectors, but inquiry users for the sales team too. This makes it possible for the system to send alerts and reports to sales users on a scheduled basis so they’re always aware of payment problems or credit issues related to their assigned accounts.

“Now instead of writing notes in the margins of aging reports, we can keep notes on who we talked with, the nature of the conversation, and outcomes of the call right in the system.  Not only has this made us more productive by eliminating re-keying, it’s easy to send information to sales so we no longer need to waste time giving e-mail updates. Plus the sales team no longer feels the need to do their own version of collections since they can see what’s being done in our department.”

Undisputed Results

Airetech Corporation purchased Anytime Collect in the fall of 2013. Since then the company has taken their average days sales outstanding from 60 days to 42 days, a 30% improvement which allows the company to turn paper invoices into cash over two weeks faster than they could with Microsoft Dynamics GP alone. Furthermore, the company has seen drastic reduction in outstanding receivables and bad debt write-offs with significantly improved access to working capital.

“With a small amount of collections being done every day by the system and by our staff, fewer invoices and issues are pushed off until they reach the point of being uncollectable,” said Capps. “This year as our fiscal year closes, our bad debt write offs will consist only of debt over two years old, all of which was incurred prior to the implementation of Anytime Collect. I am thrilled with the results we’ve seen and how easy the system is to use.  I would highly recommend Anytime Collect to anyone looking to improve their invoice collection process, and working with the e2b team has been incredible.”

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