CFO Videos: Greg Henry, CFO of Couchbase

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Carlos Vega
August 25, 2019

Greg Henry is the CFO of Couchbase, an enterprise-class, multicloud to edge NoSQL database that offers the robust capabilities required for business-critical applications on a highly scalable and available platform. and relational databases. Couchbase customers include industry leaders Amadeus, American Express, Carrefour, Cisco, Comcast/Sky, Disney, eBay, LinkedIn, Marriott, Tesco, Tommy Hilfiger, United, Verizon, as well as hundreds of other household names. One of Tesorio's earliest customers, Greg liked the product so much he invested in the company.

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Make It (Ridiculously) Easy to Pay

This sounds silly but including a link to direct payment options will radically increase the chances that you will get paid quickly. The link should take them to a payment gateway that can ideally handle credit card, ACH/EFT, and Wires. Make it stupid simple for the recipient to pay their debt.  For that payment link, as well, make sure that you are sending a secure (https://) domain. With the rise in spearfishing and email fraud targeting company AP departments, it’s important to make the paying feel as secure as possible.

Speed Up the Cadence

Many companies have a practice in collections and accounts receivable management that is to send out the first collections notice when a customer is 15 to 30 days late in paying their invoice. This may be too long to wait. A good amount of research has found that the earlier you notify customers they are late, the more likely you are to get paid. In fact, as often as not, late payment isn’t a conscious decision but an oversight or a reflection of your low priority in the bulging queue of an overworked accounts payable team. With that in mind, you may want to send the first note even if the invoice is a week or even a few days late. Consider, as well, the size of the customer and past customer payment behavior. If a customer pays 30 days late like clockwork, then it may not be worth the effort to accelerate their payment because you are encountering an internal policy of 30 days late payment. (You might be able to learn this information from a quick conversation with your AP team counterpart). 

Consider Whether Advanced Dunning Automation Tools Makes Sense

Most of the ERP systems, such as NetSuite, have some automated dunning campaign features. That said, collections teams may want to consider third-party solutions that give greater flexibility and control over dunning. For example, running campaign tests in many ERP dunning systems is not possible, and creating multiple templates is time-consuming and challenging. If your dunning ERP’s default automation system is boxing you in and is hard to use, you may want to consider shopping around for a collections automation product that has modern software features like team assignments, bulk actions, and multiple-templates. Dunning automation tools can also help you ensure that your emails are actually delivered: just like email marketing, blasting out 1,000 dunning emails in a short span of time will trigger Spam filters and significantly reduce the likelihood that your emails are received, let alone read. Recovering from a Spam catastrophe like this can be painful and require weeks of time working with IT teams. So consider the risk you may be taking before you push send.

Conclusion

After reading this, we hope you will have some ideas on how to think about building out a detailed and effective collections campaign structure. Most of what we talk about here can be turned into a repeatable process that your collections team and accounts receivable managers and analysts can fine tune and revise to improve results. You may want to revisit your process and look at the data a quarter or six months after you first implement. You should see positive results that will convert into improved metrics for Days Sales Outstanding, Average Days Delinquent, and Free Cash Flow. 

Carlos Vega
August 25, 2019
Carlos Vega is the CEO of Tesorio.
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