The company we worked with was a SAAS provider that specialized in software solutions for transport spend management audit and management, serving Fortune 500 companies. Their business model consisted of three distinct revenue streams: subscriptions, implementation charges, and managed services.

Despite dealing with top-paying companies, the company faced challenges with overdue accounts receivables (AR), and no substantial efforts were made to understand why this was happening.

To streamline the AR process, the following solutions were implemented:
1. Checking validity of all invoices: Validity was ensured by collecting all master service agreements and amendments, raising invoices as per the rates mentioned in the agreements, and maintaining a library of the agreements and amendments. Invoices for implementation revenue were raised as per the percentage completion mentioned in the agreement.
2. Changing the approach: The approach was changed from assuming that AR was overdue due to late payment habits of clients to identifying the reason for late payment.
3. Updating receivables aging: Credit notes were issued and applied against the correct invoice, invoices were sent to the correct email ID or uploaded as per client requirement, and all banks were reconciled and payments received from customers were duly accounted for before following up.
4. Customer data sanitization: In many cases, we have found that the customer data entered into our system is incorrect. For example, the email address where invoices were sent was incorrect, or the credit period was incorrect. The credit period is only counted if the invoice is sent to the correct email address or uploaded to the designated system, and if the information in the customer database is accurate. Without accurate information, getting paid on time is impossible.
5. Specific follow-up: We changed our follow-up mechanism for clients after ensuring that all the master information and supporting data were in place. Previously, the client ran an aging report from an often incomplete system and sent generic follow-up emails directly from the system. The replies to these follow-ups were not monitored in a timely manner. Instead, we ensured that the aging report was 100% accurate before sending follow-ups, and we started asking customers specific reasons why particular invoices were not paid after the due date. We monitored the replies from the customer regularly and were surprised to find that most of the payments were overdue due to minor issues such as an incorrect PO number, the invoice not being received by the customer, incorrect description of services, or late invoice submission. As we started to resolve these issues, most of the overdue payments started flowing in. We were able to recover almost twice the amount in the initial 1-2 months compared to the usual recovery.
6. Asking for customer statements: In cases where the same amount was invoiced to the customer month after month, requesting the account statement from the beginning helped identify which invoice was missed by the client.
7. Asking for remittance advice: Remittance advice was requested from customers to ensure that future payments were not misapplied against incorrect invoices.

The above steps helped recover almost all overdue AR and ensured that AR was correctly reflected in the books, resulting in better and predictable cash flow.