Assessing The Risks Of Ignoring Order To Cash Software
Days Sales In Ar
Organizations without effective order-to-cash Softwaresolutions are at huge disadvantage when it comes to accurate days sales outstanding (DSO) data visibility. DSO accounts for the average time period from when customer or buyer remits payment to the company until payment is received and ultimately, it is one of the most important metrics for securing financial stability in the long term. Yet many finance executives are dismissive of the risks associated with neglecting order-to-cash software to maintain control over their DSO accounts.
For one, lack of order-to-cash software makes it difficult to track invoices and payments. Without access to well-organized information regarding customer transactions, finance executives will find it difficult to verify transactions and assess their respective creditworthiness. This can increase the organizations risk of what is known as ?leakage? i.e., when invoiced orders go unfulfilled, leading to missed revenue and drain on the companies resources.
Organizations without order-to-cash software in place are also at an increased risk of delayed payments and longer DSO. Partially as result of foraging for vital information regarding customer invoices and payments, finance executives may be unable to process orders and send out invoices in timely fashion. This can lead to extended delays in the process and buildup of DSO, resulting in decrease in cash flow and missed opportunities.
Finance executives without order-to-cash software may also fail to spot the signs of customer insolvency that is, when companies are unable to repay their debt in timely fashion. This significantly increases the companies risk of default, reduces the chances of being able to fully collect on its outstanding receivables and further complicates matters when it comes to accurate DSO calculation.
Although many finance executives do not fully appreciate the significance of order-to-cash software, building an effective solution into their operations can drastically reduce the risk of leakage, delayed payments and other potential sources of financial instability. Without it, they?d be left operating in the dark, putting their companies finances in peril.
