6 Ways NetSuite Users Can Reduce DSO Up to 70%

Managing accounts receivable is one of the most essential parts of any business. One wrong move, and you're dealing with unhealthy cash inflows, unpaid invoices, and bad debt. Whether you're a CFO thinking about financial strategy or a controller focused on managing internal controls and processes, tracking your Days Sales Outstanding (DSO) is high on your radar.

But keeping Days Sales Outstanding to a minimum is more complex than it sounds. After all, there are many reasons why customers pay late - from labor shortages, a slow economy, supply chain delays, or even just human error.

That said, there are ways to temper a higher DSO level.

One way NetSuite Credit Card Processing users reduce their DSO levels up to 70% is by taking advantage of SuiteApp payment integrations that make the receivables process nearly effortless. Usually, you would need to hire multiple vendors to streamline payments and reduce your DSO levels, but integrations like Paystand take it one step further and helps you automate invoicing, collections, processing, reconciliation, forecasting, and more.

You can take many actions to see your average DSO drop from weeks to days.

Here are six ways you can reduce your DSO by streamlining your A/R processes through NetSuite:

1. Automate A/R Processes

For an effective DSO reduction, it's crucial to have an efficient invoicing and collections process.

Although most companies use NetSuite to manage invoicing, the process is still highly manual and labor-intensive. Because of this, controllers often spend a lot of time looking for customer information, updating spreadsheets, fixing human errors, and executing other low-level activities when they could be communicating with customers, settling disputes, and focusing on other activities that can reduce your time-to-cash.

Manual A/R processing is inefficient and costly. By implementing receivables automation, you can improve cash flow while reducing your operating costs and improving your overall customer experience.

The best part? You can eliminate repetitive processes and handle a larger volume of invoices without adding any headcount. A cloud-based payment solution (like ours) can help you invoice your customers instantly and make your collections process easier without extra work. The faster you invoice customers, the quicker you put cash back into your company.

Recommended Reading: Top 5 Payment Solutions for Automating Accounts Receivable

2. Offer More Payment Options

Another way you can quickly reduce DSO is to make it easier for customers to pay you by offering multiple payment methods.

This provides greater customer flexibility while helping shift away from less convenient options like paper checks. One of the reasons we shy away from the term "eCheck" at Paystand is because the term "check" feels like a slow, legacy transaction that can delay your time to cash by days or even weeks because of the mailing process.

That's why we created the Paystand Bank Network. By partnering with more than 18,000 banks, not only do we make it easier for your customers to do business with you, but we also offer Zero-Fee payment rails, which allow your customers to skip expensive transaction fees altogether.

Even if most of your customers still use paper checks or ACH, accepting alternative payment options can keep you ahead of the curve. Because even though many businesses still prefer to send checks, at least 64% of B2B organizations use electronic payments for over half of their transactions.

Recommended Reading: The Controller's Guide to B2B Payment Optimization

3. Embed Payment Links Into Invoice Reminders

As frustrating as it sounds, you're always going to have a percentage of customers that don't pay their invoices on time. Sending reminders when these accounts become overdue is another key part of keeping a low DSO.

Usually, a friendly follow-up email or two is all you need to get these accounts back on track. Late payments happen, and they're not always intentional. A simple late payment follow-up sequence can help you fix these situations while keeping your working relationship with the customer on good terms.

But the real game-changer is when you take the human element out of the equation and start automating these reminders. NetSuite users love combining the power of our bank network with our receivables collection engine to let their customers make payments directly from the invoices, emails, and reminders they receive.

And that's the key: Making it easy for customers to pay immediately. By regularly reminding customers to pay and removing friction from the collections experience, you can fast-track your time to cash.

Recommended Webinar: How to Integrate Payments Directly in NetSuite with Paystand

4. Review Customer Payment Terms

Your payment terms set the bar for your customers' payment behavior. While you definitely want to have a policy that ensures you get paid as soon as possible, making your terms more customer-friendly may be a more effective way to cut your average DSO.

However, this doesn't mean you should jump the gun and extend the time that customers have outstanding invoices. Get creative; consider offering early payment incentives or rewarding customers who consistently pay on time with discounts, credit terms, or early access to new products, features, or services. Combined with a .05%-1.5% late fee, you can further encourage customers to adhere to your payment term or at least reduce current DSO levels.

This works best when you remove any confusion around when invoices should be paid. You can do this easily by stating your terms visibly at the bottom of invoices and payment reminders.

5. Use Personalized Collection Plans

Another way to drastically cut your average DSO is to get strategic about how you follow up about missed or delayed payments.

Using intelligent automation features, you can use your payment software to stay ahead of the monthly collections process through personalized plans. This allows you to assign the frequency and tone of communications based on a customer's risk profile, increasing the effectiveness of outreach by letting you coordinate communication workflows based on categories, payment terms, type of receivables, payment history, and more.

This is something our customers love because they can apply a greater focus on getting delinquent accounts back on track while actually decreasing the amount of time and manual effort required to make it happen.

Recommended Webinar: Making Payments a Strategic Advantage in 2019

6. Eliminate Risky Customers

No one wants to turn their back on customers, but managing risk is a necessary part of business.

Clients with a regular backlog of overdue invoices are not great customers to do business with. Usually, only a few customers drive higher DSO levels. It may hurt to drop a client in the short term, but over time you'll save countless hours spent on chasing down their payments.

Look out for clients who are routinely inconsistent or unresponsive. If you find that an account continues to slide off track despite your best efforts to set them up for success, then it might be time to reevaluate your working relationship.

You're better off directing the time and effort spent chasing down these repeat offenders towards client acquisition and better servicing existing customers.

The Bottom Line

NetSuite and other ERP users have multiple options available to them to reduce DSO and strengthen their cash flow.

Using intuitive payment solutions like Paystand can help you get paid faster, fill unpaid invoices, track DSO levels with enhanced data, automate manual-driven processes, and even turn routinely delinquent accounts into your most reliable customers.

If you would like to learn how you can automate your accounts receivable through NetSuite's ERP platform and start cutting DSO by up 70%, receive a free, custom demo today.