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If you send out statements, do you send them through the regular mail or via an electronic exchange? Do you see a difference in the value between the two options?
Monthly or Quarterly AR statements help in improving the working capital cycle of a company. The working capital cycle depends on three main factors. The time taken to collect cash from customers (AR), time taken to pay cash to the vendors (AP) and time taken by in selling the inventory of providing the service. As AR is one of the main parts of the working capital cycle, a healthy receivable collection period ratio indicates that the company is able to convert its sales into cash in a shorter period and hence providing the required liquidity to meet its short term obligations, therefore also reducing the AP period. Sending out monthly and quarterly AR reports help in tracking the receviables, maintaining an updated aging report and follow the pending or overdue payments. This in turn helps to maintain a healthy working capital cycle.
since its a confidential business information, it should be sent thorugh a secured communication channel. electronic exchange is a more secured and effective means of communication within a business environment
in this part of world and specifically in telecom/IT despite sending many electronic reminders of AR statements does not work at all. There are too many departments involved in verification and subsequent payments(Technical/Outsourcing/Contracts/Financial) that sometimes you lost sole purposes of statement and opt for full and final settlements to cover your cost. At the end of the day it is your negotiation skills and business acumen which save your neck from AR jigsaw. Forget your margins and time value of money they are much worthy than having bad debts.(It was my answer to that question)
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