Sales are good, but cashflow is lousy!
How to improve collections with Digital Transformation - Our own case study

Always start with the your PAIN points 

We always tell this to our clients, when they ask "How do I start?".  We know the answer, because we have gone through this pain.  We can collect RM100k this month and only see 20% of that within 30 days, and the rest trickles down in the next 60 days.  Obviously that was a pain for us. At the end each month, trying to balance the cash in paying employees, vendors and the tax man.  So how do we improve accounts receivables?

How can we improve our collections? 

The DT process is methodology but it's not going to tell us how to do it. For that we need to ask a well renowned expert ....Dr. Google. Welcome to the Internet ! Where everything you need to know,  depends on how fast you can type. Just search for the following: -

  • How can I improve my collections?

  • What is collection strategy design?

  • What are the stages of collections?

  • Debt collection strategies.

  • How to reduce my receivables? 

Just ask Dr. Google and you get to know the techniques. 

What we found out - The techniques to reducing your receivables 

From our "in depth analysis and research", we found that some things we should have done...

  • Tracking - We need to track online via a system and put a KPI for each step. 

  • Proactive collection  - automate our tasks and FGS and don't wait for final week to remind the client for payment. 

  • Predictive analysis - Analyse our data: Who is late in paying? When ? What were the reasons? How did we engage with the client? 

  • Online payment - Duh! We're  in IT and we never thought we should have given our clients an easy way to pay via credit card or direct debit payment. Yes,  it costs some money, but a cost that is worthwhile to get early payment.

What's Next?

We incorporated what we got from Dr. Google and use the DT methodology to transform and get better collections. 

The 5 stages of Digital Transformation (see our assessment here) is determined by the following: - 

  1. Leadership 

  2. Customer Experience (Journey)

  3. Process , Operations and People  

  4. Data Analytics 

  5. Training 

  6. Technology

The Leadership 

This was not difficult with our CFO (Maznida) screaming down people's necks every week. The sure way to drive down "Leadership" to everyone.

The Customer Experience (Journey) 

We started mapping the steps of our customer journey on payment, from the beginning when we issue our invoice till the receipt was generated. This is important because we need to track each step and have a system to monitor and automate this process .

After that, we started mapping the journey and incorporating the digital tools and tech.  Paper invoice became online invoice generated by the system. A centralised messaging system so that everyone knows what is communicated and agreed with the client. 

 

Process, Operations and People

This relates to the Customer Experience and how internal operations and people work with the customer experience.  An awesome digital customer experience is useless,  if the "back room  boys/ gals" can't integrate the work or are not motivated to transform. 

Judging by their social media habits and on positive note, most of our finance and sales team are well versed in the technology tools. So tech literacy was not a problem. 

However, things were slow in picking up with the new method. So we started incorporating incentives and disciplinary action with KPIs reported by the system. For example, the sales team will lose 50% of their commissions if the payment is not made within the credit terms. 

Things moved a lot faster after that. 

Data Analytics 

We started analysing our data - the 4Ws and 1H.  

Our "Aha" moment when we found out, that close to 70% of delayed payments was the "Lost invoice" explanation.  We got to understand that internally our clients will have 2 levels of approval - the owner and the finance department. We started incorporating that into our Digital Customer Experience and started automating our follow ups. 


Training 

To avoid the possible blockages of the team not using the tool, we conducted a training program and documented all steps in a video tutorial for easy reference.  We utilised YouTube,  created a Training channel  and unlisted all videos in YouTube.  Only people with the YouTube link was able to see it. 

Private YouTube channel for training reference



The Technology

Of course, we used  Wizeewig's accounting system which is built on top of the Odoo platform .  It covers almost all what we need as per Dr. Google's suggestion. 

  • Tracking and proactive collections - We could automate  follow ups for each KPI and  for each step. Centralised communications and documents for quick status and updates. 

  • Predictive analysis - Data is collected and exported in Excel worksheet for further analysis. 

  • Online payment - In built online payment module. Invoices can be sent to customers for online payment module.

  • Mobile app enabled for our mobile sales team 


Key Outcomes 

In about 2 months, we have managed to reverse the collections, with 75% paid within 30 days and the remaining coming in the next 30 days.... and we are still improving,  iterating every 3 months on our Digital Transformation, scaling up in all 6 dimensions of the DT parameters. 

FREE FOR 30 days 

Start your Digital Transformation at RM299/ year

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