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How Document Management Keeps Your Money Moving

document management keeps money movingThere are two main processes to consider when it comes to keeping money flowing in to your company. First, there’s the sales process, where you earn money, and then there’s the accounts receivable process, where you collect those funds. Using a digital document management system is a great way to increase process efficiency and improve cash flow.

In fact, collection companies were some of the first to use document management systems for accounts receivable. Their income is determined by their success with collections, and document management has become key to their business and part of their competitive strategy.

But let’s start with sales: Bringing money into your company starts with selling your products or services, and in many scenarios, that means your sales team needs to quickly generate quotes and deliver them to prospective buyers. The faster you’re able to turn quotes around, the more potential sales. But quote generation is often a complex process, requiring lots of disparate information and multiple approvals before the quote is ready for the buyer.

Let’s say your sales rep has a prospective buyer waiting to receive a proposal. First, the rep needs to pull together a lot of disparate information, such as a price list, vendor information and any specifications or schematics that need to be included. The rep might also look back through old customer correspondence to see what kind of pricing your company has offered in the past. At many companies today, this step requires the rep to gather documents from different departments and go through files manually.

Next, there’s usually a quote approval process. The proposal might go to the head of the sales team to make sure the pricing is right and then to accounting for another check; depending on the size of the sale, the quote may require the CFO to sign off.

This process is inefficient on several levels. For starters, there’s all the time wasted by having sales reps retrieve documents manually and asking people for information as they’re creating quotes. Then, there’s the time wasted while waiting for approvals. These approvers are usually busy people, and may not be able to turn the quotes around quickly during their workday.

Here’s what the process looks like when you’re using document management, also called enterprise content management (ECM). All of the documents your sales reps need to access are stored electronically in a central repository. When a rep needs a price list, for instance, it’s available in seconds with a couple of mouse clicks — instead of stored in a filing cabinet on the other side of the office.

Using the old system, a rep might spend two hours putting together a proposal. With ECM, it could take as little as 30 minutes, significantly increasing sales productivity. Approvals, too, are more efficient with ECM. Instead of manually routing proposals, either in paper form or via emails, ECM allows you to set up digital workflows.

Now approvers are able to view a list of all items that need their approval and instantly route proposals to the next approver or flag them for additional review. And with mobile, cloud-based technology, busy approvers are able to process them quickly from any place at any time.

We’ve covered the ways document management improves cash flow by helping you move quotes through the door as quickly as possible. But once you’ve made the sale, you need to collect the money from that sale. And if your accounts receivable team isn’t well organized, you’re going to have a hard time collecting on outstanding invoices.

The process efficiency for accounts receivable is measured in a variety of ways. Here are some common KPIs used in B2B collections, according to the Sutherland Global Services blog:
  • DSO (Days Sales Outstanding)

  • Number of invoices collected

  • Value of invoices collected

  • Collections efficiency (total collected comparing opening accounts receivable vs. closing A/R)

  • Collections efficiency percentage (total percentage collected comparing opening A/R vs. closing A/R)

  • Reduction of overdue A/R amounts measured monthly/quarterly

  • Percentage of not yet due invoices out of total A/R

  • Reduction of aged items older than 60 days, 90 days and 180 days

You might also measure the average number of days it takes you to collect on invoices or the average percentage of your sales that are outstanding.

For an efficient collections process, the general best practice is for accounts receivable staff to have easy access to any documents related to the customer’s account, so that they are able to quickly resolve customer concerns and questions and provide documentation.

Document management is the ideal platform to provide this ability: Your staff has instant access to all relevant account information, and is able to send documentation to the customer with the click of a button – translating in significant improvements in your collection results.

For example, let’s say you have annual sales of $20 million, and your average A/R amount is $4 million. If you could bring that amount down by 20 percent through more efficient collections, your organization would have an additional $800,000 on hand during the year that could be used as a cash buffer or reinvested in the business.

Learn more about overhauling your document management processes by downloading our FREE whitepaper, “7.5 Signs Your Document Management Needs An Overhaul.”


                      7.5 Signs Your Document Management Needs An Overhaul