Soltec’s experience has shown that a significant improvement in Working Capital can be achieved through the successful implementation of Payment Term Best Practices. Soltec’s strategy for optimizing supplier payment terms is centered on the utilization of PROX terms (Proximal (“PROX”) meaning, in or of the next or coming month.) PROX payment terms are designed to provide one payment for combined shipments/invoices within a specified period of time. Soltec has assisted several hundred companies successfully implement the PROX payment terms strategy in defining the optimum payment terms.
Selecting the most appropriate PROX term for your company will require an examination of your organizations existing cash management strategies. In determining the proper PROX payment terms an organization must address the following five questions:
- What is my credit period going to be?
- What is my actual payment float period?
- What are my company’s cash flow requirements?
- What is the company’s borrowing strength?
- How often do I want to pay suppliers?
Soltec’s Payment Term Best Practice Solutions™ improve Working Capital by improving Days Payable Outstanding.
Additionally, the Payment Term Best Practices Solutions ™ have the following additional benefits:
- Reduces preprinted check stock
- Reduces bank reconciliations
- Reduces bank charges
- Reduces postage costs
- Reduces check processing
- Increases efficiency for your Accounts Payable Department
- Significantly reduces effort in cash application process
- Predictable receivables
- Reduces bank charges (less checks)
- Improves cash flow management
Evaluated Receipts Settlement: Reduce Accounts Payable Costs by up to 75%
Purchasing Card: Reduce procurement to payment process costs by up to 80%
Travel & Expense: Reduce Administrative Costs
Electronic Funds Transfer: Eliminate Check Processing, Improve Cash Management
Working Capital Improvements: Comprehensive Solutions to Increase Cash Flow
Soltec provides Payment Term Best Practices education to both business professionals and executives in both web enabled and on-site formats. Please contact Soltec to setup an educational session or to understand how Payment Term Best Practices can improve your organization’s financial performance.