Optimizing Payment Terms

Increasing cash by controlling payment terms in Epicor: A custom solution

Navigating the intricacies of payment terms is a critical aspect of financial management for any business striving to enhance its cash flow. In the Epicor ERP ecosystem, many CFOs view the reduction of payment terms as a critical lever to increase cash availability. Drawing from my extensive experience as an Epicor consultant, I’ve identified a recurring challenge: efficiently managing and monitoring the effectiveness of revising customer payment terms and advance payments in a way that supports business growth without detrimental effects. This article explores the development and benefits of a custom solution designed to implement these changes smoothly, with a significant positive impact on the bottom line.

The Challenge: The Balancing Act Between Cash Flow and Customer Relations

The goal to shorten customer payment terms to improve cash reserves is a strategic one. Yet, it requires a nuanced approach to avoid negatively impacting customer relationships. The crux of the challenge lies in enforcing new payment terms, such as implementing BPM that restrict the sales team from extending payment beyond a specific date for new clients with a provision for CFO override. Traditional methods like monitoring the bank accounts’ balance is not an effective tool for judging the success of such initiatives. There is a need for tools that track the percentage of invoices paid within the set payment term brackets over time.

The Custom Solution

Addressing this challenge can be effectively achieved with a custom-designed dashboard within Epicor ERP. This dashboard is designed to not only enforce and monitor payment terms but also to provide actionable insights into the initiative’s progress and its effect on cash flow and buyer performance. Here’s what the solution entails:

  • Real-Time Tracking: Implement a dashboard that offers real-time visibility into the status of invoice payments relative to the newly established payment terms. This feature is crucial for identifying trends, potential issues, and opportunities for further optimization.
  • Progress Reporting: The dashboard should be capable of tracking the initiative’s success over time, showcasing the percentage of invoices paid within the desired payment term brackets as well as the bank account balances. This ongoing analysis is invaluable for assessing the effectiveness of the payment terms strategy.
  • Actionable Insights for Decision Making: Beyond tracking, the custom dashboard provides insights into how payment terms adjustments impact overall financial health. These insights can guide strategic decisions and further improve cash flow.

The Bottom Line Impact

By leveraging a custom Epicor solution to manage and monitor payment terms, businesses can achieve a delicate balance between improving on-hand cash and maintaining healthy customer relationships. This strategic approach enables organizations to:

  • Increase On-Hand Cash: Ensuring more invoices are paid within the preferred timeframe boosts cash reserves, affording businesses more financial flexibility.
  • Evaluate and Enhance Performance: The dashboard facilitates an analysis of payment patterns, highlighting successful term adjustments and identifying customers who might need further terms negotiations.

Conclusion: Leveraging Data For Strategic Financial Management

In the dynamic business landscape, having access to real-time data and insights is invaluable for making decisions that positively affect the bottom line. A custom Epicor solution tailored to your specific payment term strategy can provide this competitive edge. As your Epicor consultant, I am here to guide you through developing and implementing a solution that not only meets but exceeds your financial management needs, ensuring your business thrives. For organizations aiming to refine their financial strategy through improved payment term management in Epicor, embracing a custom solution that is easily upgradeable is the way forward. Let’s transform your financial challenges into opportunities for growth.