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ReceivableSavvy’s Ernie Martin Helps you improve DSO ACH Payments

Elevation DSO Post

Speed and efficiency are important to any organization looking to grow and succeed. If you’re responsible for managing your company’s Days Sales Outstanding (DSO) and you want to better understand how to improve DSO management, you need to check out Ernie Martin’s recent post “Improving DSO Management with ACH” on 

As a resource for businesses looking to improve their payment operations, Elevation is always on the lookout for expert commentary. We know you’ll want to read the whole piece to get the most from Mr. Martin’s experience, but here are a few key takeaways:

  • The most important priority for supplier organizations is to reduce or eliminate barriers customers face when making payments. While it may not seem like it on the surface, finding ways to more effectively manage DSO will help supplier organizations with other key objectives, including improving customer satisfaction, providing quality service and ensuring employee satisfaction. One immediate way organizations can improve their DSO management is to implement or expand how they’re using ACH, especially Same Day ACH, to receive payments.
  • According ReceivableSavy’s 2017 Perception Study, the preferred method of receiving payment for supplier organizations is Electronic / ACH payments. Coming in at nearly 60% it was more than double the second choice, paper checks, which was selected by 26% of respondents.
  • An overwhelming 90% of respondents also said that getting paid faster was the most important issue for them when submitting invoices to their customers. This number is especially interesting in the context of the 26% of respondents who say they preferred to be paid by paper checks. It demonstrates that more payment professionals need to have a better understanding of how receiving ACH payments, especially Same Day ACH payments, can help achieve their business goals.
  • For businesses looking to improve how they manage their DSO, its crucial to optimize the payments mix. Not every supplier can completely convert all their payment receipts to ACH immediately, but increasing the percentage of ACH payments can help improve DSO. Some customers are still going to pay with paper checks, while others will choose different payment methods because they are incentivized to do so. If supplier organizations want to increase ACH payments, especially Same Day ACH payments, they need to ensure that it makes the most sense for their customers.

Reducing obstacles and barriers and encouraging your customers to make their payments using the ACH Network will help improve your organization’s DSO. As Ernie Martin noted, “The lower an organization’s DSO, the better their collections effort, the higher their accounts receivable turnover ratio, and the better their cash flow.” 

If you want to know more about how you can better manage your DSO, contact Elevation for a free consultation. 

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Topics: ACH, Receivables, ACH Network, Accounts Receivable

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