Credit and collections are being severely hampered by the inability of many companies to properly embrace technology, according to SunGard.
The company’s just-published
‘2015 Credit and Collection Benchmarking Study’
is based on more than 400 respondents around the world. It finds that 56% of companies admit that they have “deficiencies” in their systems while only 5% of the global firms surveyed are fully automated.
For example, not only do a large majority have spreadsheets but 46% admit to having “multiple” versions of the same spreadsheet. “Essentially, they are operating in an analogue manner in a digital age,” comments SunGard.
The study finds that this is more widely reflected in the failure of big, multi-national companies to properly adapt to centralising their systems. It is the smaller, more agile firms who are adapting best and creating service centres with single technology solutions.
Of the firms valued at over US$5bn, only 12% have managed to centralise with the others relying on multiple systems with obvious operational inefficiencies as a result.
As manufacturing and shipping volumes increase, so also do the requirements of the credit and collections group. Achieving automation in credit and collection processes is a vital way to manage increasing volumes of invoices without increased resources.
However, only a small minority (less than 5% overall) consider their credit and collections processes to be fully automated. This is linked closely to both the use of spreadsheets and complex, fragmented system architectures, hampering efforts to automate or achieve consistent processes.
“When volumes increase and resources cannot manage the influx, a company will experience a spike in days sales outstanding (DSO),” says CJ Wimley, chief operating officer (COO) of SunGard’s receivables business To address this challenge, we recommend using predictive analytics to essentially identify risk in the collections portfolio and then prioritize the risk so that collectors are calling only on higher risk accounts.”
Of particular note in this year’s report is the high proportion of respondents – over 90% – that see the opportunity for greater automation in their collections processing. Senior managers are increasingly recognising the opportunities for improvement, however, reflected by the increase in the use of risk grading in prioritising collections. There are further changes that can add immediate working capital advantage, such as segregating disputed elements of invoices and pursuing the remainder for payment.
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