How can you reduce your DSO?

Factors influencing DSO

As we explained in a previous article, DSO is one of the most important indicators for companies looking to improve their cash flow.
To To optimize its DSOa company can influence a number of factors:

• Send invoices quickly ;
• Encourage customers to pay promptly;
• Prompt reminders in the event of non-payment on the due date.

Setting up a rigorous recovery process is the key to controlling DSO.

How can you protect yourself from cash flow problems upstream?

Limiting the risk of non-payment is the basic principle for optimizing your cash flow. As long as an invoice hasn’t reached maturity, it has no impact on your cash flow.
In this case, you have several solutions at your disposal, which you can use at different points in your customer relationship.

Before contracting a service

We therefore recommend that companies avoid risky receivables. That’s why you need preventive services with reliable solutions that measure certain quality indicators for payment behavior and appropriate monitoring. A number of solutions offer you a scoring system to rate the creditworthiness or profile of your debtors.

At the time of billing

Offer payment facilities at the time of invoicing. For example, by offering different payment methods (in instalments, deferred payment), as well as different means of payment (credit card, cheque, bank transfer, direct debit).
These varied payment solutions should help your customer to pay you quickly.

 

While taking these steps upstream is a good way of limiting risks, you’ll still need to get organized in order to reduce payment times for each customer through commercial reminders.

Optimize your sales reminder

Follow up your customer proactively and efficiently.
It’s important to understand and communicate with your customer in order to obtain payment of your invoice.
Once the due date has passed, the invoice then becomes a receivable, your customer is your debtor and has a direct impact on your WCR.

Preparing your relaunch in advance, and being ready to relaunch quickly in the event of a problem with a file, will guarantee you a better DSO.

For a good commercial relaunch, you need to ask yourself three questions:

• Do you have sufficient internal resources to monitor late payments?
  Are they contacted by telephone?
• Do you have a strict customer reminder schedule in place?
  Very often, priorities upset the planned schedule and reminders are either not made or only partially.
• Due to a lack of time and internal resources, you prioritize the receivables with the highest amounts and the smaller ones are not managed?

Your internal resources don’t allow you to relaunch all your invoices, your teams are cut back by absences, you have difficulty recruiting motivated people to do your relaunches… Collectel can help you find quick and easy solutions.

Why an external dunning service?

Collectel, outsourced telephone reminder solution from SSPCollect answers these questions thanks to its teams based north of Lyon.

As specialists in reminders, trained in outgoing and incoming calls, with empathy, listening and communication skills, our staff can help you get paid quickly.
We tell you the reasons why payment has been blocked (dispute, missing document, etc.), we identify the right contacts, the right service and propose alternative payment solutions such as monthly instalments or credit card payment. The advantages of outsourced dunning :

• You can transmit your reminders as part of one-off or recurring assignments.
• All you need is an Excel file, and we’ll work with you to achieve a precise objective within a set timeframe.
  Data feedback is tailored to your requirements (daily, weekly, etc.).
• Pricing is based on the number of contacts you make. You pay no fees, only positive results.

 

In conclusion, you know exactly how much your customers owe you, you know exactly how many invoices they represent, but you don’t know why these invoices are not paid? Ask for an appointment!