Four Ways Accounting Automation Reduces High Days Sales Outstanding

DSO (Days Sales Outstanding) measures how long it takes for a business to get paid for a good or service. It is an essential metric that enhances cash flow management while enabling B2B companies to accurately gauge their financial health. Accounting automation is effective in establishing a low DSO, which means you get paid fast.  

A high DSO, however, crimps cash flow, stunts your company’s growth, and creates a stressful work environment. 

The best way to reduce DSO is to ensure your AR (accounts receivable) process is efficient and precise. Implementing accounting automation is one of the most effective ways to achieve this. PYMNTS reports companies that digitizing AR can reduce DSO by 15% to 25%.

This blog lists four ways automating your AR reduces DSO.  

1. Create efficiencies

High DSO isn’t always a direct result of customers neglecting due dates. A muddled, inefficient AR process hurts too. 

AR automation streamlines operations, eliminates human error, and seamlessly performs time-consuming manual tasks in minutes. It enables you to generate, customize, and reconcile invoices immediately, expediting the payment process and ensuring you get paid on time, getting you paid faster and supercharging cash flow. 

Bill360 enables batch invoicing, where you can send multiple payment-ready e-invoices at once rather than doing so one at a time. This saves your team hours in manual tasks while also allowing your customers to pay multiple invoices at once - a big reason Bill360 clients are paid an average of 10 days faster than their previous process.

2. Multiple payment options

A heavy reliance on check acceptance leaves you and your customers vulnerable to fraud and drives up DSO. It can take weeks for a check to arrive by mail, especially with weekends and national holidays factored in. Then it takes even more time to clear. 

A surefire way to reduce or eliminate check usage is to provide customers with multiple payment options. AR automation platforms empower your customers to set up and manage secure digital wallets, enabling them to make payments via ACH (Automated Clearing House) and credit cards by simply clicking a button.

Bill360 eases the payment process by giving you and your customers the opportunity to use AutoPay, which simply draft recurring payments from your customer’s digital wallet. You can also send invoice emails embedded with "pay now" links, allowing your customers to pay you immediately. 

3. Real-time data

What is your company’s DSO? You may know it today. But do you have the manpower, tools, and time to check it whenever you want? And are you sure it’s accurate? 

Bill360 not only calculates DSO for you but also presents it in real time on a clean, easily navigable dashboard that puts crucial information right at your fingertips. You don’t have to waste time digging up old invoices or double-checking your math. It’s all done for you and it’s all done right. 

AR automation also provides other data such as AR aging and past-due balances while providing real-time updates on which invoices have been paid or are awaiting payment. This information is precise and enables you to gauge DSO while also pointing out any pain points you can remedy to improve it.

4. Enhanced customer collaboration

More than 60% of late payments occur because an invoice was incorrect. Poor communication compounds these mistakes, especially if your customer is looking for an answer but can’t get hold of you. 

Bill360 empowers your customers by giving them 24/7 access to their own portal where they can view invoice status, update payment information, and pay bills on their time within your terms. Using real-time chat features, you customers can send instant messages to you whenever they have a question about an invoice. You can reply right away, ensuring your customers have the information they need to pay on time. 

Rather than chasing down customers once a payment is late, you can send out proactive, professional alerts with Bill360. These gentle reminders can be sent to whomever, whenever, and how often you choose. That way, you're leaving your prompt-paying customers alone and freeing your staff from making uncomfortable phone calls regarding past due accounts.

Supercharge DSO with Bill360

Bill360 offers AR automation you won’t find anywhere else with an exclusive suite of features like up-to-the-minute DSO monitoring and real-time communication tools. 

Take our free AR Health Checkup to make sure your AR process is running as well as it should be.

FAQ

What is DSO?

DSO (Days Sales Outstanding) measures how long it takes your company to get paid. The  higher your DSO, the longer it takes you get paid, slowing your cash flow.

How does Bill360 enhance the buyer-seller relationship?

Your customers can use real-time chat features in their portals to get immediate answers to any questions they may have about an invoice, giving them the information they need to pay you on time.

What are the benefits of providing customers with digital payment options?

Payments made digitally through ACH and credit cards are far safer than paying by check, and you don't have to wait for them to clear.