Process Improvement Tools Save Money and Boost Credit Score Case Study

It’s easy to know when a business has a good accounts payable and receivable process. The business’ bills are organized, they’re all in one place, and they get paid on time. Invoices are sent out in a timely manner and followed up on. Good processes are apparent in other ways, too. The business owner knows how much they have in accounts payable, has budgeted for it and is prepared to send out 1099s in January.

Having the right processes in place can save a business money and boost their credit score. Yet, many companies do not have good processes. These companies do not have the knowledge, time or expertise to make the needed improvements.

First Steps Financial recently helped a client with significant process challenges. 

The business had employed an office manager to pay bills, run payroll, invoice clients, and handle accounts receivable. Regrettably, this office manager quit without notice. The business owner then discovered that the office manager had no business processes in place for performing these tasks. Bills were tossed onto a pile on the manager’s desk and misplaced instead of being filed. The manager had forgotten to tell the business owner about some bills, which had not been paid on time. There was no system for reminders about when the bills were due. The office manager had stopped answering the phones to avoid calls from creditors. 

First Steps Financial also discovered that the company had about $400,000 outstanding in accounts receivable. About 50 percent of the unpaid invoices were a year old.

First Steps Financial overhauled accounts payable and set up an online system. This included a secure approval system for paying bills on Bill.com. First Steps Financial contacted the vendors to request that they email their bills into Bill.com. This process improvement tool reduced the amount of mail coming into the office and eliminated the need to open and file the bills. The online system sent email reminders when bills were due and required the business owner to approve payment for each bill. Bill.com provided a secure way for the business to pay bills without providing access to their bank accounts.

First Steps Financial also tackled accounts receivable. They followed up with each client with an overdue invoice by resending an invoice with new contact information. They also continued to follow up with letters and phone calls.

The automated invoicing system:



1. Eliminated at least three hours per week previously spent on invoicing. The company partners used this extra free time to focus on business development.
2. Provided the partners with an exact amount of money they were guaranteed to bring in each month. With this information, they knew for certain they would be able to hire additional staff.
3. Guaranteed that 100% of cash receivables would be paid on time. This eliminated the time it took to remind customers their payments were overdue.

The company has never had another cash flow issue. The automated invoicing system completely turned the company around.

Creating a process for accounts receivable is the fastest way to eliminate a cash flow problem. To find out how First Steps Financial can help your business, call (609) 759-5881 or email alisa@firststepsfinancial.com.