Did you know that as of May 2013, in the US, the average past due rate is 18.29%? And, currently the states with the worst past due accounts receivable statistics are:
- Florida, 24.59%
- Minnesota, 23.02%
- Illinois, 22.97%
- Georgia, 21.91%
- Hawaii, 21.79%
- Missouri, 21.41%
- New York, 21.28
- Connecticut, 20.76%
- Vermont, 20.21%
(You can check out all the best and worst states here.) And it gets worse:
- 26% of invoices 3 months old are uncollectable
- 70% of invoices 6 months old are uncollectable
- 90% of invoices 12 months old are uncollectable
The longer those overdue accounts receivable languish, the less likely it is that your company will ever be paid. The fact is, getting cash in the bank is increasingly difficult, even for B2B companies.
Factoring Accounts Receivable
It’s getting so bad, that some companies are turning to factoring – the act of selling off your receivables for 80-90% upfront, less a later commission of 1-3%. Some companies do this as a stop-gap measure, while for others it’s business as usual. From our point of view, that’s a lot to give up for immediate cash. We would propose that getting your Order-to-Cash function running smoothly can reap immediate cash benefits that are worth the investment. Read the complete article here: Businesses Turn Accounts Receivable Into Quick Cash.
Keep The Cash Flowing
This article offers up some tried and true tips for collecting the cash in a timely manner. In the article, James Walter points out that “In this day and age, everything should be stored electronically — you’re going to face a nightmare as your business grows if you don’t have a system in place to track the openings and closings of accounts, due dates and other notes electronically.”
Take note of the last point – outsource it! Read more in Make Your Company’s Accounts Receivable Run Efficiently.
Stay Up To Date with the Latest Best Practices
We’ve put together some posts designed to help you run your Order to Cash functions more effectively.
How do your collection processes, reports and KPIs measure up? We’d be happy to offer a free assessment of your current practices. Comments? Questions? I’d be happy to answer.