Late payments from your distributor customers have become the new normal. Receivable teams spend countless hours following up and re-invoicing for unpaid balances. That means account reps spend time tracking down payments when they should be generating new revenue opportunities and finance can’t accurately forecast cash flow.

Days Sales Outstanding

Days Sales Outstanding (DSO) is the average number of days taken by a supplier to collect payment from their customers after the completion of a sale. Essentially, it is the average number of days it takes to convert your accounts receivable into cash.

DSO impacts cash flow, working capital, and profitability.

If a company has a high DSO, it means that it is taking longer to collect payments, which can lead to cash flow problems and limit your ability to invest in growth opportunities. A lower DSO, on the other hand, can free up cash and allow a company to invest in its operations.

According to one study, in 2022, the average B2B company had a DSO rate of 42.6 days. This was up from 39.7 days in 2019. This is despite the average payment terms of 23.7 days. Overall, 17% of companies worldwide are paid after 90 days, solidifying your role as an invisible bank within the supply chain.

Why are customers paying late and what can you do about it?

Look at it from your customer’s point of view. They receive dozens or more invoices each month, some online, some on paper, and some in email. They review and verify each invoice, track claims, reconcile amounts, balance payment dates with cash flow, and submit payments.

B2B payments typically involve complex payment terms and large transaction amounts. Your customers have to go into multiple portals to make payments and deal with a lack of standardization amongst systems and a lack of flexibility in payment methods.

Any hiccup in their workflow can cause delayed payments. Customers would make payments in a more prompt manner if their AP information was organized in one spot.

If payments have to be mailed in, they can take up to 50% longer to be completed.

Not Seeing the Full Picture

Lack of searchable data or visibility into the claims or credit process will also delay payments. Confusion over how to short-pay an invoice if there are problems with specific line items often means that the entire invoice goes unpaid.

Supply Cloud improves DSO, reducing late payments by understanding what your customer needs to make faster payments easier.

1. ‍One spot for payments. Supply Cloud creates one spot for your customers to receive their invoices. They no longer have to remember to log into each of their suppliers’ websites to view their invoices or make a payment, making it easier for them to pay the ones that matter to you – your invoices.
2. Full integration. Supply Cloud’s OneConnect architecture means that invoices flow digitally into their payables systems without manual entry or human error.
3. Clear payment dates. Your customers have to deal with multiple payment dates across multiple suppliers, meaning that your invoices can be lost in the shuffle. With Supply Cloud, payment due dates, including early pay discounts, are clearly displayed. When it comes time for payment, invoices are clearly sorted by these dates, so nothing gets lost or overlooked.
4. Safe and secure. Supply Cloud removes the guesswork from paying invoices. With its secure online portal, the fear of fraudulent invoices – always a threat with systems that send invoices by email – is removed.
5. Find invoices fast. Invoices are digitized and easily searchable, simplifying the matching process required to verify invoices.
6. Track claims. Claims can be easily tracked using Supply Cloud’s search features, making sure your claims are approved and applied.
7. Customers can speed up the process. OnePay makes it significantly easier for customers to make electronic payments (EFT/ACH) which inherently increase the speed of payment.

In this period of economic uncertainty, the greatest financial relief for your company is faster payment of your outstanding invoices, and improved credit-management practices. Supply Cloud and OnePay remove the speed bumps that delay payments and hurt your DSO. By reducing your DSO, you can enhance your financial stability, take control of your cash flow, and pave the way for long-term success.