It is of importance for a company, regardless of their size, to have a sales and marketing arm to ensure that there is a healthy relationship between their company and their partners. In specific industries, manufacturing and retail in particular, their finance & accounting, sales and marketing processes require a certain characteristic that would allow them to make sound judgments and they turn to third parties to lessen the pressure on participating key personnel. Engaging with a third-party has proven to be a promising action for many companies as it can help in protecting their company, without having to sacrifice their partners’ performance.
One of the key items that companies outsource is their accounts receivable processes. It may not be widely considered as a main focus of a company but it definitely contributes in generating revenue, especially for retail and manufacturing companies. Taking into account a specific degree under the accounts receivable process, which is known as sales order processing, there is a protocol that third-party solutions providers are asked to follow to ensure a streamlined process. Most of the time, it is in this specific area where challenges arise.
Under sales order processing, there are three important factors that need to be satisfied in order for a solutions provider to be able to perform their tasks problem-free; these three factors are keen attention to detail, a prompt business turnaround time, and clear communication lines.
A: Attention to Detail
In conducting sales order processing, it is important for the financial analysts to have a keen attention to detail as they handle large amounts of data and it can be said that the whole process is dependent on the data that they will input. Aside from the database that they need to maintain, other tasks that accounts receivable entail is the validation of claims and billing statements that are being passed between the parties involved. Before the billing statements can be produced, analysts review the claims submitted to them, and ensuring that they were able to meet the requirements.
As the company size varies, the process of submitting billing statement also changes. Small to middle-sized enterprises often use the traditional process, which includes a hard copy of the statements. On the other hand, the large enterprises are now using methods which are moving towards the electronic kind. But regardless of the methods, one must ensure that the billing statement is clear of any errors as this will directly affect the revenue and the budget of a company’s partner and the company itself, respectively.
B: Business Turnaround Time
Time is of essence in all types of businesses, and conducting Accounts Receivable processes is no exception to this. As the process includes a set of data being transferred to a number of people, time is often sacrificed, which is why deadlines are set and solutions providers employ streamlined processes to avoid delays.
A solutions provider needs and is always expected to maintain clear communication lines between the partner and the client. In order for this to work, a solutions provider either uses their own system or a system provided by the client.
The duties of solutions providers are only limited to the ones designated upon them by a client. But there are cases wherein a company’s partner is not fully aware of this and they approach the third-party solutions provider for any disputes that they need to raise. However, it is best for your financial analysts to know where to direct and how to solve, only if they are permitted, these disputes.
These three are not the only criteria in conducting accounts receivable processes, as it may vary from one industry to another, but these three, when satisfied, may be able to help in establishing a strong foundation and may actually help a company in generating income.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.