27 ACCOUNTS RECEIVABLE MANAGEMENT FACTS FOR THE CFO

27 ACCOUNTS RECEIVABLE MANAGEMENT FACTS FOR THE CFO

Dealing with accounts receivable can be frustrating. Especially if you’re continually running into issues with customers taking far too long to pay. One thing is for sure from these accounts receivable facts, you’re definitely not alone in your struggle. One way to avoid all the issues below is by considering an accounts receivable software to automate the invoicing and emailing process.

1. 39% of invoices are paid late in the United States (Atradius).

2. 48% of customers delay payments (Atradius).

3. 52% of businesses are asked for extended terms (Atradius).

4. On average, most businesses offer customers 28 day credit terms but average days sales outstanding is 67 (Atradius).

5. Businesses in the Americas lose 51.9% of the value of their B2B receivables that are not paid within 90 days of the due date (Atradius).

6. Invalid or incorrect purchase order information leads to 49% of disputes (CFO.com).

7. 11% of customers never got the invoice (CFO.com).

8. 27% of financial executives stated that customers didn’t pay on time because they either didn’t have the money or they were unable to contact the customer to resolve the issue (CFO.com).

9. According to Credit Today, only 20% of credit departments have formalized policies and of that small percentage:

  • 19% said they update their manual every two years.
  • 13% said every 3 years.
  • 15% reported they only change their when they need to.
  • 12% said “other” which really makes you wonder then the last time they updated theirs was.

10. 2013 industry report showed that in the digital advertising industry:

  • 6% of invoices are paid in under 30 days.
  • 94% of invoices take over 30 days to be paid.
  • 62% of invoices take over 60 days to be paid.

11. 50% of companies wait between 10 and 25 days for invoice approval (Paystream Advisors).

12. Approximately 17% of business customers do not adhere to supplier credit terms (Credit Research Foundation).

13. 61% of late payments are due to compliance or administrative problems such as incorrect invoices or receiving the invoice too late to process payment on established credit terms (Credit Research Foundation).

14. 25% of credit departments do not have adequate staff to manage their workload (Credit Today).

15. 47.93% of SMBs in the B2B sector rely on limited functionality in accounting or ERP system to manage credit and collections (2014 study by e2b teknologies).

16. 53% of midmarket B2B companies are using spreadsheets to manage their accounts receivable (2014 study by e2b teknologies). And to make this even scarier…

17. 94% of spreadsheets contained errors (Dartmouth College’s Tuck School of Business).

18. Companies who rely on manual processes to manage collections, spend 15% of their time prioritizing their activities, 15% of their time gathering information to make collection, and only 20% of their time actually communicating with their customers about payment (Paystream Advisors).

19. In contrast to the above statistics, companies who are using accounts receivable automation software spend only 6% of their time prioritizing their activities, only 6% of their time gathering information for collections calls, and 62% of their time communicating with their customers about payment. (Paystream Advisors)

20. Only 4.13% of midmarket B2B companies use accounts receivable management solutions in their accounts receivable departments, that means 95.87% of midmarket B2Bs are working harder, not smarter when it comes to accounts receivable management (2014 study by e2b teknologies).

21. On average, companies write-off 4% of accounts receivable as bad debt. For a 10 million dollar company, that means they are writing off $400,000 each year.

22. 26% of invoices over three months old are uncollectable. This increases to 70% uncollectable at six months and 90% uncollectable at 12 months (US Census Bureau).

23. In the United Kingdom in 2011 indicated 75% of small businesses were affected by long payment terms or late payments.

24. The June 2013 National Average for past due receivables industry wide was 17.68% (Corterra).

25. The June 2013 National Average for past due receivables in the Construction Industry was 25.37% (Corterra).

26. The June 2013 National Average for past due receivables in the Manufacturing Industry was 20.63% (Corterra).

27. The June 2013 National Average for past due receivables in the Transportation Industry was 20.37% (Corterra).

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