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DST Asks: Does Your Business System Include Enhancements to Help Manage and Collect Outstanding Receivables?

Regardless of the size of your business, accounts receivable collections and credit management are a never ending task. Having proper credit and collections procedures in place that are solely dependent upon the utilization of your personnel’s time can be a costly endeavor. Technology can dramatically reduce those costs.

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MISSION VIEJO, CA — “The check is in the mail.”

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How many times have you heard that one?

Every time the simplest or most complex business transaction is successfully finalized or a deal is made and the contracts are signed with the accompanying symbolic handshake, the two parties head out, much like Rick and Louis at the end of “Casablanca” to what they hope is — as Humphrey Bogart immortalized — “the beginning of a beautiful friendship.”

But then – after 30 days, let’s say – the bill comes due. No payment is received, so some 30 days later, a second reminder arrives at the customer’s company. Still no payment. Then what? We know of one accounts receivable manager who described his job as “the guy with the shovel following a parade.” Whether your business is financially hunkered down or on a spending spree of growth-oriented initiatives, cash flow can make or break even the best managed firms.

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Regardless of the size of your business, accounts receivable collections and credit management are a never ending task. Having proper credit and collections procedures in place that are solely dependent upon the utilization of your personnel’s time can be a costly endeavor. Technology can dramatically reduce those costs.

Just about any company with a computerized business management system or even with a fairly simple automated accounting application can easily generate statements and reports showing the status of aged receivables. But is it enough to have only the data in an unwieldy spreadsheet without an associated action plan for account handling and receivables recovery?

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DST doesn’t think so. After evaluating the needs of parts and service enterprises within our industry, we created a customizable overlay within DSTWare with the objective of easily tracking and collecting money owed to you by your customers. Having an automated tool that provides you with accurate, timely and comprehensive information can shorten the average days receivables and provide a dramatic improvement to your cash flow. Picture it much like the sophisticated radar screens used by air traffic controllers. Without an overlay of consistently updated accompanying details, the blips on the screen are just moving targets that could either be a flock of geese heading south for the winter or a 747 transporting you and your family south for a winter vacation. Thankfully, the air traffic controller has the tools to be able to tell the difference.

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By using technology to automate a potentially time consuming and profit draining process, your firm can reap tremendous benefits. Consistent, monitored treatment of all your accounts with each step meeting well-defined performance goals will result in improved recovery rates. For example, reducing receivables from 60 to 45 days on a debt of $200,000 would provide an influx of cash of $50,000 to your firm. Operating on a 10 percent net profit basis, it would require half a million dollars of additional sales to have the same impact on the balance sheet. The collections module in DSTWare replaces the traditional aging report. You establish benchmarks by identifying the customers to be targeted based upon the size of the debt and the system produces a collections database of accounts to contact. A list of these accounts is displayed onscreen along with the best time to contact them. When an account is selected, a detailed screen displays:

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• Who to contact and telephone number
• Current debt and aging position
• Date of last payment
• Comments and date of last contact

The result is a powerful and robust real-time dashboard of your credit and collections status that increases worker productivity and reduces cycle time by eliminating the hang-ups of outdated information or manual processes and allowing timely resolution of roadblocks to collections. The overlay is customized to your company’s specific credit philosophy and accounts receivable needs and structure. Having such a solution for your business delivers immediate benefits and ongoing value. Being on top of your credit and collections processes will allow your firm to realize sales and professional benefits as well, as your suppliers benefit from your own improved cash flow.

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Having this tool at your fingertips is another example of the significance of establishing a partnership with a systems provider experienced in the details and nuances of our industry. One of the great things about the financial concerns of your business is that they involve data – and as we are all aware, gathering, storing, analyzing, disseminating and utilizing data is what the technology industry is all about. So it’s a perfect match. Oh, yes – and about that outstanding invoice: “The check is in the mail.”

We continue to love to get your responses to our weekly questions, hearing your thoughts on the topics that we post, suggestions for additional questions and anything you’d like to share. Send us an email at: [email protected] or give us a shout at 1.800.700.4DST.

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“DST Asks” is written and sponsored by DST Inc. The opinions expressed in “DST Asks” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.

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