The following situations have occurred at organizations ranging from Fortune 100 companies down to $30 million in annual revenue. In most all cases, the CFO’s and controllers were not aware of these situations occurring.

“Why would you call on an invoice before it is due when there are invoices past due over 30 days.” Comment concerning an invoice totaling over $150,000 due a week before quarter end vs. an invoice for less than $500 past due over 30 days. CashFlow Enhancement Group’s focus on maximizing cash includes a systematic, proactive approach to receivables management. Placing a “customer service” call on large balances before they are due allows for resolution of any problems before the due date so that payment can be made within terms.

“We only call the customer when they have a balance past due over 30 days.” This is the most common approach to managing receivables. It is driven by the typical Accounts Receivable Aging Report whereby the A/R staff prints an aging and looks for the visual cue of a balance in the 31-60 aging bucket. Most CFO’s are not aware that meeting their cash flow goals are based on this strategy.

“Our department is shorthanded.” Very common scenario where headcount is an issue. Customer contact and a focus on cash are the first processes to suffer in shorthanded departments. Tasks that require attention such as releasing orders, posting cash and setting up customers take priority over a systematic approach to maximizing cash.

“Our DSO is higher because we are unique in the way we do business.” Most all organizations have uniqueness in their business. But the perception that a business is unique often facilitates a higher than necessary DSO.

“We are doing fine in the receivables area.” Well, possibly yes. But many CFO’s are resigned to the fact that there are no viable options leading to significant improvements in cash and A/R performance. Many CFO’s have “managed around” the under performing asset of receivables and no longer consider it a significant driver of improved financial performance.

More Decision Support