Lorray Digital Media is a boutique video production studio focusing on the creation of corporate and commercial videos for businesses, artists and entrepreneurs. Their client base ranges from small independent business owners to Fortune 500 companies.

We are a very small operation,” said Ray Lombardi, Owner and Managing Partner of Lorray Digital Media. “My partner is based out of North Carolina, and my daughter runs the business administration. . When we need additional people we hire out shooters, editors, actors, models and more.

Given the constraints of running such a small business, Lombardi doesn’t have a lot of extra time on his hands. When he started the business, he looked at 3 or 4 different software solutions for invoicing. None of them met his needs.

“Some of the systems we tried were too complicated,” said Lombardi. “They had too many features we didn’t need. Others were too simple, and didn’t provide enough features.”

Lombardi was searching for a solution the was easy-to-use, cloud-based, and had a professional and user-friendly interface for his clients. He found all these features in Invoiced. And though he admits that he doesn’t take advantage of all the functions Invoiced has to offer, the ones he needs are there - and easy to use.

“When I’m on the road, I want to be able to pull out my laptop, create an invoice on the spot, and send it immediately to my client,” added Lombardi. “Then I can see when they have opened it, so there are no excuses about whether or not they received it.”

Lombardi also appreciates the professional look of the invoices, the fact that clients can respond immediately, and the ability to send and track reminders through Invoiced. And having a cloud-based tool makes it easy for Lombardi and his daughter to managing the invoicing process in one place, without any duplication of effort.

“Invoiced is a great system for time-strapped business owners like me,” said Lombardi. “The features and advantages are outstanding, and I only use what I need. This is the first invoicing tool we’ve been able to use in the long term, and we’re so happy we found it.”

Running a business based on credit is no easy task. You probably have some cash sales to help soften the blow, but standard payment terms of net 60 or net 90 are sure to impact your bottom line. And even with those extended payment terms, some customers still don’t pay on time.

In many industries, it isn’t easy to change standard payment terms. Clients get used to paying a certain way and may be unwilling to budge. So how can you gain visibility into what’s happening today, and what you might do to improve outcomes? Start by gathering up the relevant inputs, so you can measure the effectiveness of your collections process.

First things first: pull together all your customer payment terms and history of payments on invoices. This information should be available in your accounting or invoicing software, possibly with an export function. If you’re lucky, the metrics we’re recommending below may be available in your software in graphical form. And if not, you can always extract the appropriate data and configure some charts and graphs in a spreadsheet.

As you’re starting this process, make sure to have a timeframe in mind that will give you enough data to draw conclusions. 30 days isn’t nearly enough, as many of your customers’ payment cycles are much longer. A full year will give you a more accurate picture, and multiple years can give you even more insight. Being able to compare year-over-year data is powerful. Are there seasonal changes that happen in your collections process? Has collections improved or deteriorated over a number of years?

Now that you have your data, calculate these 2 metrics to start and review the results:

Days Sales Outstanding (DSO) measures the number of days it takes a business to collect on credit sales. It is generally calculated on an annual basis, and looks like this:

Accounts Receivable for 2016:  $200,000
                               ----------  X 365(days per year) = 73 
DSO Net Credit Sales for 2016: $1,000,000

The most common goal here is to get DSO as close to your payment terms as possible. So if your payment terms are net 60 and your DSO is 73, you can work towards closing the gap.

Collection Effectiveness Index (CEI) shows how much your company was owed and how much was collected in a specific time period (also commonly measured on an annual basis). CEI really illustrates the performance of your overall collection strategy. The closer it is to 100%, the better.

CEI is slightly more complex, in that there are multiple inputs in the ratio. Here’s an example for a specific month:

Receivables total(start of April) + invoice revenue for April - total receivables(end of April)
----------------------------------------------------------------  X 100
Receivables total(start of April) + invoice revenue for April - current receivables(end of April)

And what’s the difference between DSO and CEI? DSO is a measure of time, telling you how long it takes to collect credit payments. CEI takes a longer view, showing you how effective your collections policy is.

Understanding these collection-specific metrics can be really eye-opening - in a positive or negative way. Before you make any judgments based, compare it to industry benchmarks. At the outset, your collections performance may look weak - until you look at similar companies in your industry. And even if it still looks poor, remember that this data is based on your unique business and all its facets. Take into consideration all factors where your business may be different from others in your industry.

If you want to drill down further, there are additional metrics like Accounts Receivable Turnover Ratio (ART) and Average Days Delinquent (ADD) that will help you pinpoint the problem. But first, develop your understanding of your business’s collection status today.

DealRoom provides project management software for mergers & acquisitions (M&A). It might sound simple, but DealRoom puts its own spin on it to increase efficiency. They’ve not only built out a workflow for M&A, they’ve also incorporated data science and AI - cutting out duplicate work in the process.

Kison Patel, the founder and CEO of DealRoom, has been running boutique mergers & acquisitions practices for almost 10 years. That experience opened his eyes to the technology side of M&A.

“Companies providing technology solutions took physical data rooms and simply turned them into virtual data rooms,” said Patel. “No one was pushing anything forward.”

During the recent recession, Patel decided to take his knowledge of both the M&A and IT sectors and marry them together, with the goal of developing better technology. But he didn’t have access to that same type of efficiency for DealRoom’s own billing and invoicing processes.

“Our big challenge was that we had a few different pricing models. We ended up doing everything manually for quite a while,” Patel said. Prior to launching Invoiced, DealRoom used accounting software in conjunction with a spreadsheet to invoice customers. The spreadsheet tracked how much each company should be billed, and the accounting software provided the invoice.

This manual process got messy - fast. Each customer had different terms to follow. As DealRoom’s customer base grew, it became harder (and more time-consuming) to keep up. And multiple employees used the spreadsheet, creating a lot of room for error.

As their billing complexity increased, DealRoom started looking for a better way to manage the process. “We explored automation several times, only to find that the product in question was too expensive or couldn’t handle all of our needs.”

Given that DealRoom bills customers in a variety of formats - metered billing, subscription billing, and one-time billing, to name a few - they needed a flexible platform. They conducted several searches, and finally found Invoiced on their last try.

“Functionality was the number one factor for us,” stated Patel. “We wanted a product that could handle all our billing scenarios. We also wanted an easy integration with our existing account software and a user-friendly interface for employees - all in a cost-effective solution.”

Invoiced met all of Patel’s requirements - and then some. “We wanted a lot of flexibility in the product we chose, so we could test things on the fly.” There were no complicated modification processes, like other SaaS tools on the market. DealRoom could test things on a moment’s notice.

“The support is phenomenal,” adds Patel. “We’ve tested other providers who are simply checking all the boxes. They’d get back to you at off hours, and it was a lot more challenging to get support.”

Deploying Invoiced took the DealRoom team about 3-5 days from start to finish. Over time they’ve migrated clients from the old system to Invoiced, and they’ve seen huge gains.

Previously, DealRoom sent an 11-page contract to each client that would provide terms and ask for payment information. “It was tough to get people to sign that contract,” said Patel. “They’d often have to go back to their legal department for review, and then take the time to submit a payment.”

“Now we have the terms in an Invoiced sign-up form. All our clients have to do is check the box, and we can request payment through Invoiced. That alone gets our deals done faster.”

Based on Invoiced’s suite of features, DealRoom has seen a decrease in days sales outstanding (DSO) from 2-3 weeks to 2-3 days.

DealRoom gets paid faster with Invoiced - and they’re saving time too. “Invoiced has drastically reduced our accounting team’s workload,” Patel said. The accounting manager used to spend an average of 10-15 minutes per account per month, checking and double-checking to make sure everything was correct. That management time has since dropped to a few seconds per account.

On top of getting paid faster and saving time, DealRoom gained another big benefit from using Invoiced: peace of mind. “We now have greater visibility for managing our accounts,” said Patel. “When an account is past due, we can all easily see that - and follow up immediately.”

“Invoiced is an extremely flexible and easy-to-use tool,” said Patel. “We achieved ROI immediately by using Invoiced features to better execute on our accounts. We no longer have to play cat-and-mouse with our clients - Invoiced automates it all.”