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Data for today’s episode is provided by Mercator Advisory Group’s viewpoint – Receivables Management Is Back on the Radar
Industry & foreign vs. domestic have big impact on receivables:
- In the US, there’s a 14.6% difference in delinquency between foreign and domestic past due payments
- In comparison: Brazil has a .9% gap in past due payments collecting domestic vs. international
- Mercator estimates that paper processing, a continuing issue in the US market, has something to do with it…
- Similarly, cash conversion cycle (CCC) varies drastically by industry:
- Between 1997-2017, construction industry’s CCC was 170 days manufacturing: 85 days retail: 56 days
- For a $4 billion revenue retail company, a 9 day collection period might result in $18 million worth of positive income
About the report
Automating some or all of the activities that encompass corporate accounts receivable has been climbing the priority list as financial professionals increasingly see how digitalization affects the cash cycle.
In a new research report, Receivables Management Is Back on the Radar, Mercator Advisory Group reviews how the age-old problem of efficiently collecting money from buyers and optimizing cash application can improve the bottom line through reduced cost and better cash flow. The growth in digital payments over the past several years is now having a follow-on effect in the handling invoiced payments, causing treasury to consider improving receivables management as well.
“There is a continuing trend for convergence of corporate financial systems and processes, generally referred to as procure-to-pay. Receivables have in the past been considered a specialized operation, not necessarily viewed as generically connected to the other financial management processes,” commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “This is beginning to change as more companies are recognizing that effective processing of inbound payments also has significant impact on working capital effectiveness. Banks are also getting the message as traditional lockbox services become inadequate to handle the increase of e-payments. Forward-thinking banks and their clients are now taking a closer look at supporting receivables processes with new technology.”
The document is 15 pages long and contains 5 exhibits.
Companies and other organizations mentioned in this report include: AFP, Atradius, Bank of America, Basware, Billtrust, CGI, CheckAlt, Citi, CreditPoint, Comdata, Coupa, Dade Systems, Deluxe, FIS, Fiserv, FTNI, High Radius, Invoicely, Mastercard, J.P. Morgan, Microsoft, Nacha, Oracle, PNC, Quickbooks, SAP, Serrala, SmartStream, Tradeshift, Transcentra, Tungsten, U.S. Dataworks, Visa, Wells Fargo, and Zoho.
