Accounts Receivable Management – ERP Systems Can Improve Cash Flow

Simplifying ERP Systems for Wholesale Distribution and Manufacturing series continues with Accounts Receivable Management for cash flow improvement.

Crucial to your competitive advantage is the ability to know your financial standing at any given moment and all that effects it.

Key Performance Indicators Dashboard

ERP Simplified

Using a completely integrated ERP system you interact daily with key performance indicators (KPIs) via a centralized ERP dashboard. Knowing your financial standing helps you improve cash flow by intelligently interacting with your data so you can take proactive steps.  Let’s visit some common scenarios that just may sound all too familiar to you.


Accounts Receivable Scenario 1:

You review your global A/R from a centralized ERP dashboard by sorting your oldest receivables aging bucket, say 120 days old (You can define the aging anyway you like.). By sorting it in descending order, you can see which customers are holding up your cash.

• Now, your A/R manager can take proactive measures with customers and post a comment directly in the ERP dashboard about them. For example, “Spoke with customer’s A/P manager who said they didn’t have the invoices.”

• Your A/R manager immediately found the invoices for the balance due by drilling down to the detail directly from the ERP dashboard.  The invoices are immediately emailed to the customer who now indicates they will pay them with this week’s check run.
• A follow-up “to-do” is posted to be reminded to watch for the payment.

This scenario is played out for any days-old range you want to start immediate action. The to-do list becomes the pro-active action list for follow-up and collection calls enabling you to stay on top of your A/R to improve cash flow.

Accounts Receivable Scenario 2:

You set automated alerts in the ERP system to hold new orders when a customer’s receivables reach your pre-determined amount.

• Your A/R manager, or whomever you select, receives an automated notification that the customer has reached their credit limit and their orders are put on credit hold.

• Now, your A/R manager can take proactive action, by staying on top of all held orders on a daily basis to get payments collected and orders out the door again.

This simple, proactive, automated alert keeps your accounts receivable-thus, your cash flow-from racing out of control. You can stay on top of “at risk” customers before they become a bad debt without somebody manually monitoring the process. As a bonus, you also keep your customer’s new orders coming in to help with a positive cash flow.

You may be surprised to see how easy ERP can really be.  To see how you can increase productivity and thereby reduce operating costs, sign up for our ERP simplified series.

ERP Simplified Series

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