3 Ways Wholesalers and Distributors Can Better Manage their Accounts Receivable to Make the Sale and Get Paid

Last week we attended the 2016 Convenience Distribution Association (CDA) Marketplace in Las Vegas, where convenience stores, wholesalers and distributors connect.During the opening keynote, Chad Owen (Chairman of the CDA), addressed the crowd with an important message, “change is not easy, but necessary...you cannot continue to do the same thing, expecting a different result”. This message resonated with me. The shift in technology has changed customer preferences and created a demand for customized services, more convenience and real- time results. Companies that operate like they did 20 years ago will be forced to adapt in light of growing competition, and changing customer demands.

Speaking with distributors and wholesalers at the show, it was interesting to hear how they have adapted technology to help them better manage one of their most valuable assets, inventory. In this digital age, they rely on systems that track and provide insight on sales data to call the shots on which inventory to push to convenience stores next: How many units are sold? Which SKUs are performing the best? Are certain products performing better in certain locations vs.others?

But for those who leverage this sales data down to science, another challenge arises - cash flow. What good is a sale if you don’t get paid, or paid on time? Accounts receivable (AR) becomes another balancing act that distributors and wholesalers need to manage to ease their pain with slow payers, manual processes and lack of insight into their working capital.

Looping back to Mr. Owens’ opening keynote, this is an area of business where change may not seem easy but is necessary, especially in an industry with tight margins and intense competition.

Thankfully technology like AR automation helps make this necessary change easy and streamlines the entire process. It was apparent during conversations with distributors and wholesalers at the show that there is a need for this technology, now.

The time to automate is now

Wholesalers and distributors deal with a large number of customers, who each have their own preferences, payment terms and credits. This makes it challenging to track and manage invoicing and payments. Invoices are mailed and payments are received by cheque; manual matching becomes the only way to reconcile. This process is not only time consuming, but costly. Think about it - one distributor we met with mails 200 invoices a day (1000 a week). Postage alone costs them on average 50 cents per invoice - $500 a week!

Today accounting teams are wearing multiple hats, juggling many tasks and struggling to do more with less. Technology could help them automate their manual and repetitive tasks and refocus their time on high value tasks that matter the most – getting paid and improving customer satisfaction.

It is evident the time is now to start automating AR, the most valuable asset next to inventory. To ease the balancing act between making the sale and getting paid, here’s 3 things wholesalers and distributors should consider for their AR process:

1. Make viewing invoices convenient:

Moving your invoices online has many benefits. For one, it automatically reduces the time it takes for your customer to receive their invoice. With AR automation, your customer can log into your branded online portal to view their invoice and view of their outstanding balances. This eliminates the travel time of the invoice leaving your office and landing on your customer’s desk. With AR automation, your invoices are automatically uploaded to the portal, customers are notified by email, and the invoice is available online 24/7. This helps eliminate the issue of customers frequently asking you to resend invoices that they have misplaced or didn’t receive by mail / email.

2. Make it easy to pay:

Offering payment acceptance online is possible with AR automation. With an online portal, customers can log in and select which invoices they want to pay with a variety of payment methods – ACH, EFT and credit card. Not only does this make it easy and convenient for your customers to pay, but also it eliminates the manual matching of payments to invoices. Reconciliation is automatic within the portal and pushed seamlessly back to your ERP.

3. Get the full picture on your working capital:

By utilizing an AR automation portal, you will be able to log on to see all invoices you have issued, payments received, top outstanding accounts, and your trending DSO. This helps your AR team make strategic decisions on which customers to follow up and provides constant insight on the status of your working capital.