The Best of Both Worlds: Integrating HQ and Local Market Collection Strategies

Effective collection practices are crucial for the financial health and sustainability of any organization. In the evolving business landscape, moving from reactive to proactive collections management is essential. This shift not only ensures a stable cash flow but also strengthens customer relationships and reduces risks. This article explores the importance of efficient collection strategies for robust financial health and offers key best practices for optimizing collection processes in today’s global, technology-driven business environment.

Collections and Working Capital Optimization

Minimizing the time between a sale and payment receipt is crucial for optimizing working capital. Efficient collections processes enable organizations to reinvest in growth opportunities, manage inventory effectively, and enhance overall operational efficiency.

Companies that effectively manage their collections can significantly reduce Days Sales Outstanding (DSO), freeing up cash flow and improving Days to Cash (DTC). Hence, it makes total sense that businesses utilizing optimized collections processes are more likely to meet their financial targets.

Balancing Local Collections vs. Global Standardization

Many global organizations face the challenge of balancing local collection practices with global standardization – this is essential for achieving uniformity and efficiency. Effective collections management streamlines processes, reduces discrepancies, and ensures a steady cash flow, supporting broader operational goals – standardized collections practices can significantly improve working capital performance.

However, managing local collections versus global standardization is often challenging. Global standardization aims to create consistent processes, products, and branding across all markets, leading to economies of scale, simplified operations, and cohesive communication. Conversely, localization tailors strategies to meet the specific needs and preferences of local markets, enhancing cultural relevance, regulatory compliance, and user experience. Organizations often find that a hybrid approach, blending elements of both standardization and localization, allows them to leverage the efficiencies of standardization while remaining adaptable to local market demands. In today’s tech-oriented business environment, it’s easier to implement such a hybrid approach with the help of automated solutions.

Assignment Prioritization

Task prioritization is critical for effective collections and working capital management. Without a clear prioritization framework aligned between sales, customer success, and finance teams, identifying and focusing on the most critical and high-impact tasks can be challenging, leading to scattered efforts and poor resource allocation. Implementing a robust prioritization strategy and conducting risk-based assessments, helps A/R teams focus on high-priority accounts first, ensuring timely payments. This structured approach improves collections performance and enhances overall financial health and profitability for the organization.

Collections and Risk Mitigation

Proactive collections are key in effective risk management, especially around credit risks. Identifying potential issues early on allows organizations to minimize the risk of defaults, avoid legal challenges, and ensure compliance with regulations. Evaluating credit risks should consider not only the customer’s financial situation but also broader factors such as geographic exposure and overall business unit performance. 

Furthermore, without clear insights into the status of collections, it is challenging to effectively allocate resources, prioritize high-risk accounts, and develop strategic interventions to mitigate potential losses. The absence of real-time data and comprehensive reporting can also hinder communication and coordination among departments, leading to fragmented efforts and inefficiencies.

To enhance risk management, organizations need to invest in robust collections management systems that provide real-time visibility, detailed analytics, and automated reporting. 

Collaboration Between Finance and Business Units

Effective collaboration between finance and business units strengthens the overall business and reduces surprises for management around customer defaults. When finance teams work closely with sales, customer service, and operations, they gain a better understanding of customer behaviors and market trends, leading to more effective collections strategies. This collaboration ensures that collection practices align with broader business objectives, enhancing customer relationships, improving overall financial performance, and strengthening the finance department from a business perspective.

Collections and Future Planning

Accurate collection forecasting enables organizations to anticipate and plan for future cash inflows and even strategic direction. Effective collections management provides critical data and insights that inform future financial planning, helping organizations forecast cash flow, allocate resources, and set realistic financial goals. 

By analyzing historical collections data, organizations can identify trends and patterns in payment behaviors, which can be used to predict future collections performance and adjust strategies accordingly. This foresight allows for better budgeting and financial planning, ensuring that sufficient resources are allocated to manage delinquent accounts and mitigate potential risks. 

Additionally, a well-structured collections plan can highlight areas for process improvement and technological investments, further enhancing efficiency and effectiveness. Ultimately, integrating collections data into future planning enables organizations to make informed decisions, optimize their financial strategies, and maintain a stable economic footing.

 

Essential Best Practices to Optimize Collection Processes in a Modern World

#1: Incorporating a Billing Workflow

Creating a structured billing workflow tailored to your company’s policy is fundamental for effective collections management. Experience shows that companies employing a structured billing workflow can significantly reduce late payments, improving cash flow.

#2: Moving from ERP collection management to Automated Solutions

Transitioning from manual or ERP-based collection processes to automated solutions provides real-time insights into collections status, enabling proactive decision-making. Automation offers minute-by-minute updates, which are crucial for understanding financial resilience and managing cash flow effectively. 

Relying solely on ERP for collections management is not optimal for mid to large corporations. AR automation that seamlessly integrates with ERP systems provides a single source of truth and can reduce Days Sales Outstanding (DSO) by up to 15%.

#3: Implementing Effective Monitoring and Auditing Processes

Robust monitoring systems should be implemented by headquarters to effectively oversee regional collectors, ensuring compliance and mitigating potential risks. Effective monitoring and auditing processes can significantly reduce risk exposure while improving compliance and overall financial stability.

Conclusion

Effective collections management is not just about ensuring timely payments; it’s about fostering financial stability, nurturing relationships, and mitigating risks. By embracing proactive approaches, leveraging automation, and prioritizing clear communication, organizations can optimize their collections processes, ensuring long-term financial health and sustainability.

OPYO’s collections module helps organizations transition from decentralized, reactive collection processes to a global, proactive, and centralized approach. 

Discover how OPYO helped Taboola streamline their collections process and contact us to learn more about how OPYO can enhance collections management and drive financial resilience in your organization.

 

Webinar: Optimizing Working Capital – Hands On

This webinar offers a hands-on guide to the Advanced Cash Flow Model, providing visibility into AR-driven collections and AP-driven disbursements, and showing you how to integrate periodic items into forecasts for precise financial planning. We also explore OPYO IQ to gain a holistic view of  financial setup, develop detailed currency cash flow forecasts, and leverage actionable insights to refine cash flow management.

Taboola Uses OPYO to Streamline Global Collections Data and Leverage It for Smarter Business Decisions

Key Takeaways:

Taboola, a market leading technology company powering recommendations for the open web, struggled with a fragmented global collections process that lacked visibility and consistency. By implementing OPYO, a financial operations solution, Taboola achieved:

  • Enhanced global collections visibility and tracking.
  • Data-driven risk management for informed decision-making.
  • Streamlined collaboration and knowledge sharing between finance and business teams.
  • Established and clear collection performance KPIs
  • Improved collections efficiency and effectiveness.

Background:

Taboola, a leader in the advertising technology industry, helps advertisers and publishers grow their business through personalized recommendations.  Managing their global collections process was challenging due to inconsistent collections practices across various regions, and difficulty in overseeing collection activities due to a lack of centralized data and reporting.

In pursuit of a solution for better collections management, the company turned to OPYO, a sophisticated financial management system. This case study discusses Taboola’s journey in overcoming these challenges using OPYO, with use spreading across functions and departments, with benefits that exceed streamlined collection management.

The Challenge:

Taboola relied on local collectors, in individual markets, who employed different collection methods. This made it very complicated for the central finance team to effectively oversee global collections.  Furthermore, the absence of established Key Performance Indicators (KPIs) for collector performance hindered insights into collection efficiency. Ensuring data accuracy across regions was also challenging, especially where central finance-recommended processes were not fully adopted. Additionally, there was an opportunity to enhance HQ’s understanding of credit risk, as credit requests were primarily based on customer financial evaluations.

The Solution:

Taboola implemented OPYO, a financial operations software designed with the goal of  streamlining and centralizing collections management. OPYO’s rich set of features was especially appealing for what Taboola was looking to achieve and included:

  • A unified platform for global collections data, enabling real-time visibility and analysis.
  • A set of risk assessment tools that leverage data to support informed credit limit decisions.
  • Performance dashboards to track collector activity and identify areas for improvement.

Implementation:

Implementation of OPYO was designed with ease-of-use in mind, facilitating seamless integration with existing systems such as Netsuite CRM. One of the key advantages of OPYO is its automatic connection capabilities without any coding requirement , which streamline the process of retrieving data from Netsuite and other CRM platforms. This feature significantly reduces the time and effort required for data migration and integration, ensuring a smooth transition for collectors and stakeholders, while reducing IT risks. 

The automatic connection feature of OPYO simplifies the implementation process, eliminating the need for manual data entry or complex integration procedures. This not only enhances efficiency but also minimizes the risk of errors associated with manual data transfer. By seamlessly integrating with Netsuite CRM and other CRM systems, OPYO enables collectors to access real-time data without disruption to their workflow.

Furthermore, the collaborative efforts between Taboola’s finance team and the creators of OPYO played a pivotal role in ensuring a successful implementation. Through effective communication and strategic planning, any potential resistance to change among collectors was addressed proactively. This collaborative approach fostered a positive environment for adoption, allowing for a swift and efficient transition to OPYO.

The ease of implementation and automatic connection capabilities position OPYO as a versatile solution capable of seamlessly integrating with any CRM platform, thereby empowering collectors with the tools they need to excel in their roles.

The Results:

Over time the use of OPYO, the data and dashboards it provides, served as a basis for risk assessment and management, as well as a key contributor to sales and business management decisions.

The use of OPYO has yielded significant improvements in Taboola’s collections process:

  • Enhanced Visibility and Tracking: OPYO provides a centralized platform for global collections data, offering superior visibility and enabling in-depth analysis of collections activities across all regions.
  • Data-Driven decision making: OPYO’s risk assessment tools empower Taboola to make informed decisions about credit limits and collections strategies, mitigating potential risks. Since starting to use OPYO, all credit data is centralized, and HQ can now easily view all BU and geographic credit exposure measures.
  • Improved Collaboration: OPYO facilitates seamless communication and collaboration between finance and business teams, fostering a more efficient collections approach and eliminating unexpected customer defaults entirely. Since starting to use OPYO, the company improved overall collection, set smarter global KPI standards, and reduced unexpected customer defaults.
  • Increased Efficiency and Effectiveness: By streamlining the collections process and providing valuable data insights, OPYO has demonstrably improved collections efficiency and effectiveness for Taboola.
  • Standardization: All global credit requests are now included in OPYO in a standardized manner to support swift data-driven decisions.

Conclusion:

Through strategic collaboration and technological innovation, Taboola successfully transformed its financial operations with OPYO. 

The company acknowledges improvements in metrics like Days Sales Outstanding (DSO) and Days Payable Outstanding (DPO), reflecting the positive impact on collaboration, risk management, and overall collections efficiency. 

The system’s reliability and trustworthiness, coupled with robust support from its development team, solidified its position as a valued partner in Taboola’s journey towards financial excellence. With continued collaboration and innovation, Taboola is set for further success in the competitive digital advertising landscape.

OPYO launches advanced cash flow model and OPYO IQ to enhance financial forecasting

OPYO, a working capital optimization solution, introduces two new advanced modules to revolutionize financial forecasting with precise insights for informed decision-making that will empower business and corporate managers 

Ra’anana, June 5, 2024 – OPYO, a leading working capital optimization solution, is thrilled to announce the launch of its two new modules: advanced cash flow model and OPYO IQ for better control and insights. With these cutting-edge modules users can  now enjoy unparalleled functionality as well as precise and actionable insights, to explain financial results.

The new cash flow module supports all of the corporate cash movements both from AR-driven collections and AP-driven disbursements, providing comprehensive visibility into cash movements, offsetting inflows and outflows. 

Through the OPYO interface, users can seamlessly add periodic items to both forecasts and actuals, ensuring accuracy and flexibility. The model offers quarterly to annual rolling forecasts across all required dimensions, including periodic intervals, geographies, business units, flow types, and currencies, with daily updates based on business activities to ensure the most current data is always available.

Ongoing quality improvement is a key feature, as the accuracy of the forecast is continuously measured and enhanced. Additionally, users in different locations can work in their local currencies, thanks to the model’s multi-currency view feature. 

The ability to easily compare annual cash flow plans, different versions and actuals, enables effective monitoring and strategy adjustments. 

This launch is an exciting addition to the recent release of OPYO IQ, a powerful new layer designed to empower business and corporate managers with enhanced control and insights. 

Positioned as the managerial layer above the Collector (operational layer) and the OPYO Main Analytical layer, OPYO IQ offers a holistic view of the company’s financial landscape. It supports deep insights into cash movements, helping users understand the underlying dynamics of their cash flow. It also includes combined transactional cash flow, detailed currency cash flow forecasts for operational hedging, and comprehensive cash performance insights. 

Embedded explanations for movements and detailed recommendations for identified risks and opportunities provide users with actionable insights. 

“OPYO’s new cash flow modules are a game-changer for financial teams, offering detailed and accurate forecasts that are crucial for strategic planning and decision-making,” said Muki Sharir, Founder and CEO at OPYO. “Our aim is to provide a tool that not only identifies cash opportunities but also mitigates credit risks, ultimately guiding businesses towards sustainable growth.”

About OPYO:

OPYO is a working capital management solution leveraging both technology and professional services to help finance teams better understand cash opportunities and produce accurate cash flow forecasting. Serving as the financial team’s compass, OPYO is essential for planning and driving business growth.

For more information about the new cash flow modules and how they can benefit your business, please visit www.opyo.com  or contact [email protected].

Navigating the Crossroads: Off-the-Shelf vs. Custom Solutions for Working Capital Analytics

In today’s world of finance, the effective management of working capital is key for organizational success. As companies strive to optimize their liquidity, streamline operations, and fortify financial health, the role of comprehensive working capital analytics is critical in enabling businesses to gain nuanced insights into their cash flow, receivables, payables, and inventory management, fostering informed decision-making and strategic planning.

In the pursuit of deeply understanding their working capital state, organizations often find themselves at a crucial crossroad – to adopt an off-the-shelf solution readily available in the market or embark on the journey of crafting a bespoke, in-house working capital analytics system. Both paths present distinct advantages and challenges, making the choice between them a pivotal decision that can significantly impact an organization’s financial landscape.

In this article we will dive into this decision-making process, dissecting the pros and cons of off-the-shelf solutions and custom-built analytics software. The aim is to equip finance professionals, decision-makers, and IT leaders with the insights needed to make an informed choice tailored to their unique organizational requirements.

Building your own working capital analytics: Pros

Organizations seeking unparalleled control and tailored precision tend to turn to the prospect of building their own working capital analytics solutions. Crafted with a meticulous focus on specific needs, this approach offers a suite of compelling advantages that can revolutionize how businesses comprehend and manage their working capital. Some of the advantages this approach offers include:

1. Tailored to specific organizational needs

One of the primary advantages of developing an in-house working capital analytics solution is the ability to tailor the software precisely to an organization’s unique requirements. Unlike off-the-shelf alternatives that adopt a one-size-fits-all approach, custom solutions can be designed to align seamlessly with an organization’s existing workflows, business model, and strategic objectives.

Imagine for a minute a global finance firm with a complex network of subsidiaries operating in diverse markets. By building a bespoke working capital analytics solution, the organization can integrate specific currency conversion algorithms and regional economic indicators, ensuring a nuanced analysis that caters to the unique characteristics of each market it serves.

2. Control and flexibility

The autonomy afforded by custom-built solutions grants organizations unparalleled control over their analytics infrastructure. This level of control extends to the adaptability of the system, enabling organizations to seamlessly integrate new data sources, scale functionalities, and pivot their analytics strategy as business needs evolve.

3. Enhanced data security

For many companies that are handling sensitive financial information, data security is non-negotiable. Custom-built working capital analytics solutions empower organizations to implement robust security measures, ensuring that critical financial data is safeguarded against potential breaches or unauthorized access. 

For example, a large investment bank dealing with confidential client portfolios and sensitive market data can build a bespoke analytics solution with state-of-the-art encryption protocols, multi-factor authentication, and role-based access controls. This customized approach fortifies the organization’s data security posture, mitigating the risks associated with off-the-shelf solutions.

Building custom working capital analytics software: Cons

While the allure of tailor-made solutions for working capital analytics is undeniably appealing, organizations must tread carefully through the nuanced landscape of custom development. This bespoke approach, though offering significant advantages, is not without its set of challenges and drawbacks.

1. Higher upfront costs

Building a custom working capital analytics solution often entails a substantial initial investment. The costs associated with hiring skilled developers, acquiring necessary technology infrastructure, and dedicating resources for project management can be considerably higher compared to the relatively modest upfront costs associated with off-the-shelf solutions. It may also divert some of the IT and dev team’s attention from focusing on their core responsibilities.

2. Longer development timelines

Custom-built solutions demand time for meticulous planning, development, and testing phases. The longer development timelines can be a critical factor. In fast-paced market environments, where financial trends evolve swiftly, a company opting to build its working capital analytics may find that the time required for custom development puts them at a disadvantage compared to competitors who opt for off-the-shelf solutions with quicker implementation timelines.

3. Ongoing maintenance and support

Once a custom solution is deployed, ongoing maintenance and support become imperative. Regular updates, bug fixes, and adaptations to changing business requirements demand continuous attention and resources.This means that a company investing in a custom analytics platform must establish a dedicated support team capable of addressing issues promptly, ensuring system ongoing integrity.

4. Need for skilled developers, QA, and financial expertise

Building a robust working capital analytics solution requires a team with not only skilled developers, QA professionals, and dedicated resources, but also deep financial expertise and a comprehensive understanding of financial processes. This combined skillset is crucial for developing accurate insights, ensuring data integrity, and aligning the solution with business objectives. Acquiring and retaining such talent can be challenging, particularly in a competitive job market. Companies looking to independently develop their own working capital analytics solution may face difficulties in attracting and retaining top-tier developers and QA professionals, potentially impacting the overall quality and reliability of the analytics solution. 

5. More difficult access to external databases and third party software

Custom-built solutions may encounter challenges when integrating with external databases and third-party software. Ensuring seamless and secure connectivity and data synchronization can be a complex task, potentially leading to delays in data access and analysis.

Unlocking efficiency: Off-the-shelf working capital analytics in Finance

Off-the-shelf (OTS) working capital analytics solutions have emerged as pragmatic choices for finance organizations seeking efficiency without the complexities of bespoke development. These pre-packaged solutions are designed to address the diverse needs of finance departments, offering a range of advantages that cater to finance groups in both established enterprises and emerging startups.

Cost-effectiveness

One of the most compelling reasons to opt for off-the-shelf working capital analytics is the cost-effectiveness associated with ready-made solutions. These products often present a more budget-friendly alternative, eliminating the need for substantial upfront investments in development teams, technology infrastructure, and extended project timelines.

Faster implementation

Off-the-shelf solutions provide a rapid route to deployment, minimizing the time between adoption and operational use. For finance teams seeking swift access to analytics capabilities, this accelerated implementation can be a decisive factor in maintaining a competitive edge.

Pre-built features and integrations

OTS working capital analytics solutions come equipped with pre-built features and integrations that streamline the analytical process. These features often include standard financial metrics, reporting templates, and compatibility with widely used financial software, reducing the need for extensive customization.

Ready-made access to external customer data

Many off-the-shelf solutions offer seamless ready-made integration with external databases and software, facilitating quick access to essential customer data. This interoperability enhances the breadth and depth of analytics, enabling organizations to derive insights from a comprehensive data landscape, and reduce their financial risk levels.

Rich and innovative feature set inspired by the crowd

OTS solutions benefit from continuous improvements driven by a large, diverse user base and multiple needs. The large community of users provides valuable insights, spurring innovation and the introduction of new features that cater to evolving industry trends and best practices. This, many times can take finance operations to the next level, helping finance teams introduce new ways to look at data, offering a fresh perspective to customer credit risks and the overall financial stability of the organization.

Some popular Off-the-shelf working capital analytics solutions

OPYO

https://www.opyomind.com/

OPYO is a working capital management solution leveraging both technology and professional services to help finance teams better understand cash opportunities and produce accurate cash flow forecasting. The solution was designed by finance teams, and leverages a deep understanding of challenges and pains around accurate forecasting, collection, reporting and visibility. OPYO offers automatic organizational visibility around credit risk exposure and cash performance from the AR, AP and inventory aspects, driving real-time understanding of risk exposure, credit issues and cash performance. 

Taulia (A SAP company)

https://taulia.com/

Taulia provides working capital management solutions, helping businesses optimize their cash flow by offering tools for electronic invoicing, supply chain finance, and dynamic discounting. Taulia’s services aim to improve the efficiency of the financial supply chain, allowing businesses to better manage their working capital and strengthen relationships with suppliers.

Kyriba

https://www.kyriba.com/

A cloud-based treasury and financial management software provider, offering solutions for cash and risk management, payments and working capital optimization. Key features include cash forecasting, liquidity management, bank connectivity, financial risk management, and payments automation. The software is designed to streamline treasury operations, reduce manual tasks, and improve overall financial visibility.

HighRadius

https://www.highradius.com/

Provides software solutions for automating various financial processes – accounts receivable (AR) automation, order-to-cash, treasury management, and artificial intelligence-driven analytics. HighRadius’ platform includes modules like Cash Application, Credit Management, Electronic Invoice Presentment and Payment (EIPP), and more. 

These off-the-shelf solutions exemplify the diversity and capabilities available to finance organizations, offering a balance between convenience, cost-effectiveness, and customization options tailored to specific operational needs.

Tailoring off-the-shelf solutions: Personalized adjustments for working capital analytics

While off-the-shelf (OTS) working capital analytics solutions are designed to cater to a broad spectrum of users, they recognize the diverse and unique needs of individual organizations. Providers of OTS solutions have embraced the imperative for customization, offering tools and services that empower finance teams to make personalized adjustments without the need for extensive development efforts.

Leading OTS providers equip their solutions with configuration and customization tools, allowing users to tailor the analytics platform to their specific requirements. Through user-friendly interfaces, finance professionals can adjust parameters, modify reporting templates, and fine-tune key performance indicators to align with their organization’s goals.

OTS solutions are also designed with scalability in mind, accommodating the evolving needs of finance organizations as they grow and diversify. Users can scale their analytics capabilities seamlessly by integrating additional data sources, or expanding user access. This adaptability ensures that the solution remains aligned with the organization’s changing dynamics.

To further facilitate personalized adjustments, many OTS providers offer professional services that extend beyond the out-of-the-box functionalities. These services often include consultation, training, and support from experts who can guide organizations in maximizing the potential of the analytics solution.

Conclusion

In the realm of working capital analytics for finance, there is no universal solution. The decision between off-the-shelf (OTS) and custom-built solutions should be a deliberate and well-informed process. Finance teams must strike a balance between cost-effectiveness, customization needs, and adaptability to changing market dynamics. Ultimately, the selected solution should serve as an enabler for data-driven decision-making, strategic planning, and sustained financial excellence. While OTS solutions may relatively offer convenience and rapid implementation, they may lack customization capabilities. Conversely, custom-built solutions cater to specific needs but require significant upfront investment and lead time. Optimally, a hybrid approach combining technology and professional services can offer a tailored solution with expert guidance, ensuring successful implementation and ongoing support. The decision-making process itself is an integral part of the journey toward optimizing working capital management. Whether leveraging the efficiency of OTS solutions or the precision of custom-built analytics, organizations should approach this decision as a strategic investment, fostering a future-ready financial landscape that propels them towards sustained business success.

SaaS startups finance people – are you managing a tight enough ship?

In the fast-paced tech world, things have changed. Not so long ago, everyone thought that growth was the single most important KPI, and making profit often took a back seat. But recently, with the change of winds in the global economy, startups have had to rethink this approach. They’re now learning to rebalance growth and profitability right from the start.

Whether you feel cash constrained or not, finding this delicate growth-profitability balance is important, throughout the startup life cycle. Early, middle or late stage startups, none of them want to be losing money on every transaction. This is especially important in SaaS businesses, where there is high cost of user acquisition 

In this article, we’ll take a look at the significance of accounts receivables and how finance teams at SaaS startups manage them as well as the critical implications the finance team’s practices can have on the startup’s resilience and even survival.  

The growth-profitability balance – by startup phase

Early stage startups: Starting small but dreaming big

Early stage startups need to be aggressive about growth.  They’ve got big dreams, and their primary focus is growing their customer base as quickly as possible. Profit isn’t their top priority right now. While profitability remains secondary, having a clear understanding of per-customer unit economics is important – both for raising more funds, and for making smart business decisions in the future.  

Mid stage startups – Starting to scale

Things get tricky as startups start to grow and mature. Profit starts to matter more, to demonstrate business sustainability over time, but high growth is still expected. Now will be the time to start looking at cohort profitability – figuring out which groups of customers are making the company the most money over time. The goal is to find the sweet spot – grow steadily and make enough money to keep going. It’s a delicate tightrope walk between the urgent need for growth and the responsibility to be financially self-sufficient.

Mature startups: IPO on the horizon?

At some point, successful startups start thinking about going public. It’s a big deal. Now the company finances go under a magnifying glass. Bad habits, overspending or inefficiencies in sales and marketing, trying to achieve growth no matter what the costs are can make or break the IPO, and the future of the company. 

Key tips for staying on top of your SaaS business KPIs

In the competitive world of SaaS, measuring success is crucial for businesses to survive and thrive. Being able to track the most important KPIs is vital for making informed decisions, and financial data is no exception – the goal is a “no-surprises” approach to running finance.

Tip #1: Know your cash 

A simple statement, but unfortunately, it’s rarely the case. You can’t rely on stories, promises and spreadsheets. Implement a digital software solution, such as OPYO, to be able to monitor and understand cash analytics, regularly. 

Tip #2: Know your cash flow

Annual and Monthly Run Rates (ARR/MRR) and Profit and Loss accounts offer valuable insights and are important metrics. Yet (especially) in challenging times, the real king emerges – cash flow. Cash flow information becomes the compass that guides startups through turbulent waters. Understanding the actual cash flow is crucial since what’s recorded on the books as revenue doesn’t always translate to real cash in hand. This can lead to a scenario where you are lower on cash in reality compared to where you think you are – that’s a risky place to be in. 

Tip #3: Don’t compromise on accurate cash forecasting

As mentioned above, run rate and actual cash don’t often correlate — booked revenue that wasn’t yet paid and sits in aged accounts receivable (AR) — revenue but no cash.

Accurate cash flow forecasting depends on running a tight ship when it comes to Account receivables (AR). Easier said than done. Looking at company finance departments, we see several key challenges to efficiently managing AR, enabling accurate cash flow prediction. 

Efficient Accounts Receivables management: Challenges

Managing account receivables can be a challenging and daunting task, but if dealt with correctly, it can also reveal opportunities to grow, adapt, and strategize. Let’s overview some of the common challenges around accounts receivables management:

Weak enforcement of payment terms

Many businesses offer products or services on credit, with invoices tied to specific milestones. Ensuring timely payments in such cases is essential, yet challenging.

Lack of monitoring

Monitoring accounts receivables data for insights can be challenging, but it can raise early warning signs you don’t want to miss. Here are a few key metrics to look at:

  • Days Sales Outstanding (DSO) – indicates the average time a company takes to collect payment after a sale. It is considered healthy when it remains within 50% of the stipulated commercial terms. For instance, if the payment term is EOM+30, a favorable DSO would be 45 days.
  • CFF Accuracy – To forecast cash flow effectively, it is recommended to adopt a bottom-up approach. This involves analyzing DSO at various levels, starting from individual buyers, progressing to business units, and culminating at the corporate level. This detailed assessment allows for a comprehensive understanding of receivables management and facilitates precise cash flow predictions.
  • Best Possible DSO – Indicates what your on-time payment turnaround is going to be.
  • Average Days Delinquent (ADD) – the average number of days it takes to collect late payments. The lower your ADD score, the better.
  • Turnover Ratio – shows how well you manage the credit you  provide your clients and how efficient you are at collecting payments. The higher the ratio the better.
  • Collection Effectiveness Index (CEI) – helps to understand how strong your accounts receivable management is
  • Decentralized AR management

Businesses lose control of AR if they can’t centrally track them or easily audit customer communications.

Ineffective communication strategy around AR

If you’re not clear and formal about payment expectations, and your no-delays policy, customers may think it’s OK to be late. 

Sluggish dispute resolution 

Customers will tend to hold payments until disputes are resolved or corrected. Disputes can also worsen the relationship with the customer, creating unnecessary friction that makes it much more difficult to collect payments – leading to bad debts or increased credit risks.

Lack of Payment Incentives: 

The absence of incentives for early payments may encourage customers to delay, prioritizing their own liquidity for as long as they can, an incentive to pay early can help – directly affecting cash flow.

Conclusion: Sailing Towards Success

Smartly navigating these challenges is critical for creating a resilient startup that can sail beyond early growth stages into stable profitability and growth.  These aren’t just obstacles; they’re the building blocks for creating a strong foundation for lasting growth.

Collection and how you manage Accounts Receivables is not just about overcoming financial hurdles. It’s about helping the business generate and identify opportunities to grow, adapt, and strategize – all are critical capabilities in the dynamic world of SaaS.



Partnership between TCS and OPYO

Our Blog

Partnership between TCS and OPYO

Posted on January 4, 2022 by Opyo Team

OPYO challenges common assumptions, helping your business drive immediate change with standard technology and limited resources; faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers, focused on process improvement. Designed to identify inefficiencies, risk, spot opportunities and call for immediate action. OPYO is about generating value: Identify, quantify and act. faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers OPYO challenges common assumptions, helping your business drive immediate change with standard technology and limited resources; faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers, focused on process improvement. Designed to identify inefficiencies, risk, spot opportunities and call for immediate action. OPYO is about generating value: Identify, quantify and act. faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers faster than ever before. Effective management – OPYO offers a robust and proactive credit management solution, supporting business, responding to your daily changing needs. OPYO is connected deeply into daily transactions, with sensitive sensors, powerful forecasting models and AI capabilities, linked to business drivers

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