Managing cash flow is arguably the most common challenge that small business owners face. There are a few strategies that can be implemented to gain control of a poor cash flow situation. These strategies—often recommended by trusted financial advisors—give business owners the ability to make decisions that enable positive cash flow going forward. One tactic is to implement AR management strategies aimed at improving the average days to pay on accounts receivables.
Determine Current AR Trends with CHATA.AI
In order to understand if AR trends are negatively affecting cash flow, you must first understand the current state of a business’ AR.
You need to know the answers to the following questions:
- What are the average days to pay?
- Average days to pay for the last 12 months?
- What are the average days to pay per customer?
- Average days to pay per customer for the last 12 months?
You can type each of these questions directly into CHATA.AI and receive immediate answers.
Uncovering the data that answers these questions will allow you to see if, in fact, you’re dealing with an AR management problem. It can also tell you if the AR problem is recent or if it’s an ongoing issue for the business. You’ll immediately see if there are any customers driving the average days to pay up or down.
Taking Action on AR Insights
Based on the answers you’ve discovered, you’ll already have a much clearer path forward. You can then provide recommendations and take action based on the insights you find in the data.
To sharpen your strategy, you can also take things one step further. In CHATA.AI, drill down to uncover the underlying details in each customer’s data with a single click. This allows you to see the nature of each customer’s AR habits. If a customer has a longer than average repayment timeline, you can see whether the the slow payments are recent, if they are cyclical, or if there’s any correlation between days to pay and the total invoice amount.
The business owner may need to have a discussion or even end the relationship with any customers who continually pay weeks or months later than the agreed-upon terms.
As part of an ongoing strategy, you might recommend that the business owner update their terms and conditions, implement a late payment penalty, or begin collecting payments in stages through the duration of a project, for example.
With CHATA.AI, it’s easy to take any customer repayment trend into account when making decisions that depend on cash flow. Our intelligent, rolling cash flow forecasts incorporate repayment habit data. So, if a customer habitually pays late, the cash flow forecast will automatically reflect that so the business is able to plan accordingly.
Traditionally, finding the answers to these questions is a long and tedious process. Pulling multiple custom reports is time consuming. These rigid reports restricts any exploratory analysis that would allow advisors and their clients to get to the root of the problems they are trying to address. With CHATA.AI, you can discover actionable insights in seconds and make decisions ASAP.
Check out more ways you can use chata.ai’s features to help you turn business data into the powerful insights that put you on the road to success.