Mail Delivery Change Could Cost a Large Company Up to $100 Million Annually

Bill more quickly.—“Many companies still bill once a week, or even once a month. This may be simpler, but it’s counterproductive. Bills need to go out as quickly as possible,” said Ms. Heald. “One good first step is to consider delivering bills via e-mail. But it’s critical that companies confirm delivery, either by phone or using electronic receipts. The longer it takes for an invoice to reach a customer the longer it will be before the invoice enters the customer payment process.”

Make proactive collections a priority.—“There’s a lot most companies can do to take a more strategic and proactive approach to collections,” said Heald. “Companies should segment their customer base to better understand where collections problems are, and where the best opportunities for improvement lie. If companies want to ensure that payments will be timely regardless of mail impacts they need to be first in line. Collections contacts prior to the due date of a receivable are key.”

Encourage payments via electronic means.—“Organizations should, now more than ever, conduct focused efforts to transition more of their customer payments to electronic methods such as using an automated clearing house (ACH), wire, or debit/credit, starting with those customers accounting for the majority of revenue. ACH payments are a fraction of the cost of checks and ensure faster delivery,” said Heald. “For some companies, it could be as simple as making sure that electronic payment remittance information is included on the face of the invoice.”

Implement relevant performance indicators.—“Companies need to get ahead of the game, and measure float now in areas like mail, bank clearance, and payment processing,” said Heald. “This will enable them to set reasonable improvement targets.”

Understand and enforce terms and conditions of contracts.—“It’s surprising how many companies simply don’t enforce the existing provisions in their contracts,” said Ms. Heald. “For example, they may allow their customers to calculate payment due dates from when the invoice is received while the contract calls for it to be calculated based on the day it is issued.”

Reconsider grace periods and discounts.
—“Grace periods and early discounts can be more carefully tracked, to avoid giving customers discounts they haven’t earned,” explained Heald. “Unless customers change their payment processing strategies to account for the increase in mail float, which is unlikely to happen, payments will be received later than ever, including discount payments.”

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