A company can reduce days sales outstanding with: • Better credit approval • Better payment terms • Better billing • Better collection Better credit approval includes: • Accurately assessing customers’ credit risk • Establishing a sensible credit policy that is consistent with the company’s strategy and making that policy transparent • Setting a deadline by when credit decisions should be made • Periodically reviewing the credit approval process Better payment terms include: • Standardizing payment terms for all customers • Requiring upfront deposits or down payments • Offering incentives for early payment (or penalties for late payment) • Improving the customer-onboarding process Better billing includes: • Sending invoices quickly • Ensuring that invoices are accurate • Automating the billing process • Creating an online customer portal Better collection includes: • Enforcing payment terms • Creating an aging report • Training staff for collections • Improving the cash application process Alternative …
