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A Centime Case Study

A Centime Case Study

How one growing business transformed AR with Centime

Company reports 76% reduction in days past due, 188% improvement in collections effectiveness, $900,000 single quarter improvement in working capital


One growing company had a problem with their collections

A leading inventory optimization solution provider knew its Accounts Receivable processes needed an overhaul. The business was growing, but its finance team was challenged with collecting customer payments on time. On average, receivables were running nearly 60 dayspast due, and their Collections Effectiveness Index (CEI) was in the single digits.


If the company was to effectively manage growth, something had to be done.
In September 2022, the business’ CFO implemented Centime AR to digitize and automate their AR and collections processes.

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26 Jan 2023

Accounts Receivable Automation

Listen in as Centime experts and our clients walk through this case study in an engaging webinar.

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Centime AR immediately delivered benefits

Within 12 weeks of using Centime AR, the company, which preferred to remain anonymous due to the sensitive nature of the findings, realized a multitude of benefits, including:
 

      Working capital improvement in just one quarter

     Improvement in CEI

     Reduction in days past due

     Efficiency gains enabled their team to manage more customers

Collections Effectiveness Index
      

The Collection Effectiveness Index (CEI) is a measure of the quality of a company’s collections process in a given time period. It is a ratio of the cash collected versus the amount available for collection.  A CEI at or above 80% indicates a highly effective process; a CEI below 50% is considered problematic and in need of attention.

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Before   Centime

The company’s CFO knew he needed to improve his collections processes.

In January 2022, CEI was at 16% and payments were on average received 46 days past due.

The company hired an employee to call customers and remind them to pay their past due invoices. While her efforts showed an improvement in AR collections efficiency and days past due, she was spending hours every month emailing and calling customers and the anticipated reduction in late payments had not been realized. It was clear that increasing staff levels was unlikely to be truly effective and could not support the company’s growth objectives.

Realizing that staffing alone could not address the issue, the CFO explored software solutions to assist his clerk and help achieve their AR goals. On the advice of 512Financial, his strategic finance partner, the CFO implemented Centime AR a component of Centime’s Cash Management Suite.

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Prior to implementing Centime AR Automation in September 2022, collections efficiency was at 32% and payments were received 29 days past due on average.

After  Centime

After a 3-week process of implementation, training and initial use, the AR clerk the CFO had hired began using Centime’s automated collections workflow functions. Customers were proactively reminded of impending payments, along with corresponding invoices, and given a convenient online payment option.  Automated reminders continued past the due date if payments were not received, with reminders being customized based on relationships.

By October 2022, the clerk had assigned 45 customers to automate collections workflows. By November, it was 77 and in December 83 customers were assigned. During that initial three-month period, the company experienced clear, quantifiable improvements in Days Sales Outstanding (DSO), days past due, CEI, and working capital.

By November, DSOs had dropped to 37 — 8 days below the generally accepted levels and down from a high of 174 in July 2022. By December, average customer payments had dropped to 7 days past due, from a high of 53 days in June. CEI had risen to 92% by December 2022, from 16% in January 2022.

 

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The AR clerk had saved countless hours per month on tedious, manual collections activities, and could focus on higher value tasks. In addition, invoice aging reporting was automated and resulted in additional efficiency gains. Perhaps most importantly, the AR process at the company was now scalable and repeatable as the business continued to grow.

“Our collections effectiveness has skyrocketed with Centime. Not only do we collect 92% of payments on time now, but when customers do pay late, it is on average by just seven days. It is a huge improvement that makes our incomings more predictable and saves time for our valuable employees who had been sending emails manually to remind customers to pay on time,” said the CFO.

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About Centime

With its cash management solutions, Centime helps small and mid-sized businesses thrive.

With Centime Cash Management, businesses can monitor cash balances, forecast cash flows, automate AP and AR, access a range of cost-effective credit and liquidity solutions, and track key indicators of cash flow and business performance.

Centime was awarded 2022 Commercial Banking Fintech of the Year by Aite-Novarica.

See how Centime helps you manage your cash more effectively.

only-butterfly 1

About Centime

With its cash management solutions, Centime helps small and mid-sized businesses thrive.

With Centime Cash Management, businesses can monitor cash balances, forecast cash flows, automate AP and AR, access a range of cost-effective credit and liquidity solutions, and track key indicators of cash flow and business performance.

Centime was awarded 2022 Commercial Banking Fintech of the Year by Aite-Novarica.

See how Centime helps you manage your cash more effectively.


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