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Improve DSO and Cash Flow with Acumatica Payment Processing

Acumatica blog DSO and cash flowIs Your High DSO Impacting Cash Flow? Get Paid Faster with Acumatica Payment Processing

If your company is heavily reliant on the quick payment of receivables to have cash to pay for operational expenses, such as salaries, utilities, etc., you may have struggled to pay these expenses occasionally. And if you have the data to calculate it, you may find that your Days Sales Outstanding (DSO) is high. To solve those high DSO issues, a company must determine what factors are impacting payment collection.

In this blog, we'll take a closer look at the ways to improve cash flow and lower DSO with tools integrated with Acumatica. Here’s a hint: If you get paid faster, you’ll lower your DSO.

Cash Flow is a Leading Health KPI

Once you get past the startup phase, or when it’s time to seek credit lines or investors, your cash flow is going to be looked at as a leading indicator of the health of your money coming in from paid invoices versus the money going out to operate the business. Typically measured by DSO, a high value is worrying because it may foretell cash flow problems. A high DSO value can indicate your company may be experiencing a hard time when converting credit sales to cash.

DSO Underlying Factors

If DSO is an indicator of your customers’ ability to pay their invoices on time, then any effort to reduce DSO must include examining customer credit risk. Most companies start by defining healthy parameters for acceptable customer credit risk to easily measure and thus ensure that all new customers fall within the newly defined, acceptable level.

A word of advice: seek the buy-in of your sales agents early. It will be difficult to give up a sale because of a customer's credit problems, so you'll frequently see successful companies implement incentives and penalties so that salespeople and sales managers adhere to your new customer credit requirements. Some companies purchase credit insurance to help mitigate credit risks to help prevent losing an otherwise profitable customer.

Steps to Getting Paid Faster

One of the most common barriers to on-time payments is that your customers don’t know what their payment terms are. Take a look to see how you can improve your likelihood of quicker payment by ensuring your customers clearly understand what their payment terms currently are. The simplest way to address this is by listing their payment terms clearly and obviously on their invoices. Companies that use Acumatica cloud-based ERP software have workflows that automate this process for them so their invoices clearly show the terms of payment and when they’re due. Next, assess how often and if you're regularly communicating with your customers about outstanding payments.

Another tactic you can take to speed payment time is to make it easier for your customers to pay with whatever payment type they prefer or their company requires. For example, some customers may prefer to make electronic payments or issue their employees payment cards for certain purchases. This can be a huge cost if you're not intelligent and don’t choose your payment partner and plan wisely.

Acumatica Payment Processing

One of the quickest ways to lower your DSO is to find a trusted expert to guide you and who will educate you on your payment automation options. VIP Integrated Payments is a leading provider of integrated payment technology solutions to North American merchants and an Acumatica payments partner. We are differentiated by our strategic partnerships and multiple platform model. VIP provides a broad suite of end-to-end payment solutions and superior US-based customer support. We have spent more than 25 years integrating and developing relationships to help you get the best deal.

Our VIP credit card processing solutions integrate seamlessly with your Acumatica and most other ERP/accounting systems, allowing you to accept credit card payments inside your software. The integration automatically posts payments to invoices, so there’s no need to go back into your program at the end of the day to reconcile your invoices or balance your general ledger, saving you hours and headaches.

Contact the experts at VIP today to start saving time and money with Acumatica ERP integrated credit card payments. You can reach VIP by phone at (888) 791-9390 ext. 101 or email us.