July 14, 2023

Document management helps keep money flowing

Document management helps keep money flowing

Document management helps keep money flowing

There are two main processes that need to be taken into account to prevent money from flowing into a company. First comes sales process, where you make money, and then comes receivables process, where you process those funds. Using a digital document management system is a great way to improve process efficiency and improve cash flow.

In fact, collection companies were among first to use a receivables workflow management system. Their income depends on success of their collection, and document management has become key to their business and part of their competitive strategy.

Let's start with sale. Raising money for your company starts with selling your product or service, which in many cases means your sales team must quickly create and deliver offers to potential buyers. The faster you can flip offer, higher potential sale. However, generating an offer is often a complex process that requires a lot of different information and numerous approvals before offer is ready to be sent to buyer.

Let's say your sales rep has a potential buyer waiting for an offer from you. First, sales representatives must pull together a lot of disparate information, such as price lists, supplier information, and any specifications or diagrams that need to be included. Sales reps can also look back at old customer communications to see what prices your company has offered in past. In many companies today, this step requires sales reps to collect documents from different departments and manually review files.

The proposal approval process usually follows. The proposal may be submitted to head of sales to ensure pricing is correct before another review is considered; Depending on volume of sale, proposal may require signature of CFO.

This process is inefficient on several levels. To start with, sales reps are manually retrieving documents and asking people for information as they create offers, all of that time is wasted. Then time is wasted waiting for approval. These approvers tend to be busy people who may not be able to quickly convert proposals during business hours.

Document management helps keep money flowing

Here's process for using Document Management, also known as Enterprise Content Management (ECM). All documents that your sales representatives need to access are stored electronically in a central repository. For example, when a sales rep needs a price list, they can get it in seconds with just a few clicks, instead of keeping it in a filing cabinet on side of office.

In old system, a sales representative could spend up to two hours drafting a quote. With ECM, this can be done in as little as 30 minutes, greatly improving sales efficiency. The use of ECM can also improve approval efficiency. ECM allows you to set up a digital workflow instead of manually sending paper or email quotes.

Approvers can now view a list of all items that require their approval and immediately forward proposals to next approver or flag them for additional review. With cloud-based mobile technology, busy approvers can process them quickly anytime, anywhere.

We looked at how document management can improve cash flow by helping you get offers as quickly as possible. However, once you make a sale, you need to receive funds from that sale. Collecting money from delinquent accounts can also be difficult if your accounts receivable team is poorly organized.

Different ways to measure effectiveness of accounts receivable process:

  • Receivables turnover in days;
  • Number of invoices received;
  • Invoice received;
  • Percent collection (percentage of accounts receivable at beginning of period to accounts receivable at end of period);
  • Reduce amount of overdue receivables measured monthly/quarterly;
  • Percentage of invoices not yet due to total accounts receivable;
  • Reduce accounts receivable 60, 90 and 180 days overdue;
  • For an efficient debt collection process, it is recommended that Accounts Receivables have easy access to any documentation associated with a customer account so that they can quickly resolve customer issues and concerns and provide relevant documentation.

    Document Management is ideal platform to implement this feature: your employees have instant access to all relevant account information and can send documents to clients with click of a button - in other words, it is a significant improvement in results you collect.

    For example, let's say your annual sales are $20 million and your average accounts receivable is $4 million. If you can reduce this suMMU by 20% through more efficient fees, your organization will receive an additional $800,000 per year that can be used as a cash buffer or reinvested in business.