The Revenue Cycle Function requires excellence in four key areas, each contributing to a company’s success and operational efficiency. Recognizing these focus areas will allow your company to generate a frictionless revenue cycle flow and improve your cash flow, customer service, and overall profitability. When providing B2B collection services for your business, Leib Solutions makes sure to take each of these factors into account to deliver you the best possible ROI.
Credit management is the first facet of revenue cycle management, and it includes the development of credit policy, onboarding new customers, and managing the trade credit risk exposure of the company. Tools used include analyzing credit reports, financial statements, employing automated credit scoring, credit application processing, checking customer references, collaboration with internal departments (e.g., sales), as well as automated workflow to control customer monitoring and credit operations.
Dispute and Deduction Management
Handling customer deductions may be the most complex job in the accounts receivable department since these “exceptions” are the result of process, product, promotion, price or shipping errors. Accordingly, a system is required to prioritize, route and track these issues throughout the company for resolution, and to highlight root causes since systemic deduction issues will not be cured otherwise. After investigation, a significant percentage of customer deductions will be found to be erroneous, and must be collected to avoid losing profits.
Cash Application and Accounts Receivable Management
Cash application and accounts receivable management should be automated to handle cash application, EDI, ACH and credit card payments seamlessly. A modern cash application system will be virtually manpower-free and automatically match payments and invoices, credits against deductions, etc., as well as initiating new transactions (for example, debit memos) from the cash application process.
Management of the receivables collection function is critical, yet receives little management attention, or technology investment. Starting with advanced systems to drive and track the process, educate and manage staff, and monitor results, there is much to do — but the payoff is significant.
A well-run collection function will employ automation that prioritizes, drives, and tracks collection activities governed by corporate rules and standard best practices as part of the system. We have seen performance variances as much as 30% between companies in the same business with the same customers, depending on how they operate and enforce their business rules. Imagine two similar $200 million (sales) companies, one with a DSO of 38 days and the other with 52 days. One has $8 million less cash than the other and more money tied up in working capital, quite unnecessarily.
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Leib Solutions is a B2B collection agency that delivers superior accounts receivable and debt collection services in the United States and internationally. Interested in our services? Contact us today!