Processing Corporate Receivables Challenging for Corporations, Finds Aite

A new report from Aite Group reveals the major issues negatively impacting corporations’ receivables processing. Based on an online Aite Group survey of 80 senior receivables and treasury managers from US-based corporations with annual revenue of US$1bn or more, the report presents the challenges companies face in applying incoming cash to receivables and credit accounts, and identifies value propositions for an integrated receivables solution.

Credit has become difficult for corporations to obtain due to the recession, making management of corporate receivables even more critical than usual. Average days sales outstanding (DSO) is an important measurement for receivables processing – it determines how quickly a company collects on consumers’ bills and companies’ invoices. Among Aite Group’s survey sample, the overall average DSO is 44.5 days. Approximately one-third of respondents cited having a longer average DSO than the total group, and three-quarters of respondents have an average DSO of greater than 30 days – (standard payment terms for consumers and businesses).

Straight-through processing (STP) represents full automation of the receivables and cash application processes, and is desired by companies seeking quick, accurate, and inexpensive processing of payments. Nearly half of the surveyed companies require manual intervention when processing receivables.

“Despite ranking among the largest companies in the US, survey respondents indicate that their firms have corporate receivables shortcomings in internal staffing, technology, arrangements with trading partners, and challenges from the weak economy,” said Nancy Atkinson, senior analyst with Aite Group and co-author of this report. “These problems are opportunities for the banks and technology vendors that support these companies; in particular, banks and technology vendors should focus on improving receivables processing by providing payments recipients with automated reconciliation and workflows.”

Receivables Processing Challenges of Corporations

• On average, 55% of corporations’ receivables are processed straight through, which means that for 45% manual intervention is required to complete processing and payments do not automatically get posted to internal accounting systems.
• More than one-third of companies experience unauthorised discounts/concessions of US$500,000 or more annually.

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