A/R Automation significantly reduces outstanding debtor days for customers.

A/R Automation significantly reduces outstanding debtor days

Customers using IODM’s automated accounts receivable (A/R) platform, have experienced significant reductions in outstanding debtor days.  As a result, these companies have seen improvements in both cashflow and greater access to working capital.  Both of which can help to fuel future growth plans.

Using invoice data as the basis for analysis, IODM included a diverse range of industries, including Professional Services, Health and Materials Handling in the analysis.  Payment terms as well as debtor payment behaviours vary markedly across different industries.  It was therefore important to capture data from a range of companies to include these differences.

 

What data was used?

The data used in the analysis included each companies first and last quarter Aged Trial Balance (ATB) for the past 12 months.  The percentage of  debt for each aged ‘bucket’ was then compared and calculated as a change (%) over time.   Ideally, a reduction in the percentage of debt would be seen for the 60 & 90+ days ageing buckets, whilst an increase in ‘Current’ would be seen as favourable.

 

Individual and overall results

The results indicated that all companies experienced significant improvements in how their aged debt was allocated over time.  Specifically, all companies demonstrated reductions in older aged debt levels (60 & 90+ days) and increases to ‘current’ aged debt levels.  Individual company results were then aggregated to provide a cross-industry result, as reflected in the graph below.

 

 

On average, all clients experienced a reduction of (28%) & (26%) respectively on aged amounts at 60 and 90+ days respectively. Conversely, the percentage allocated to ‘current’ naturally improved, growing on average to +33%.

Customers using A/R process automation have reported a range of benefits to their business.  These  include improved cashflow and operating efficiencies, as well as reduced costs associated with borrowing, referral to collections and write-offs.

 

What does this mean for my business?

Businesses can draw confidence from these results, indicating that improvements in debtor payment behaviour can be achieved for all industry types.  By digitising manual and inefficient processes, companies can now achieve consistency and reach across their entire customer (debtor) base without to expand team size.

Automated A/R platforms like IODM Connect, are easy to connect with and simple to use. To find out more, register for a demonstration below.

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