Month-end stress in businesses can be real, especially for financing and accounting teams. When it comes to closing the books while getting all the data accurate, it can be tiring and labor-intensive for the team to work through all of it for long hours.

Month-end accounting is a crucial process for every financial team in the business, and it happens at the end of the fiscal month.

Let&#39;s discuss more this process and how one solution can eliminate all the time-consuming and tedious work, making it stress-free for them!

<ol>
	<li>
	What is month-end accounting?
	</li>
	<li>
	What are the challenges faced during month-end accounting?
	</li>
	<li>
	How can automation help improve your month-end accounting?
	</li>
</ol>

&nbsp;

<h2>What Is Month-End Accounting?&nbsp;</h2>

Month-end accounting or month-end close is a process taken to review all the financial and accounting data of the previous month and ensure all the books are closed.

It helps to keep a track of all the financial transactions taking place during the month, as well as keep the data accurate, organized and complete. This will also help you increase efficiency and streamline other accounting audits, especially making it easier for year-end close.

The month-end closing process helps you identify the loopholes and gather insights on how you can solve them for the next month. It gives visibility into data and helps take informed decisions for better financial planning.

&nbsp;

<h2>What Are The Challenges Faced During Month-End Accounting?&nbsp;&nbsp;</h2>

<h3>Manual Work Prone To Errors &nbsp;</h3>

Most accounting and financing teams rely on manual tools like spreadsheets and documents to compile the data.

With the massive amount of data needed to enter on spreadsheets, it can become confusing and inefficient since spreadsheets weren&#39;t built for all this complex data, in the first place.

This can result in errors, paving the way for inaccuracy in the month-end accounting process. It can start as small errors that go unnoticed and later when everything is compiled, turn into inaccurate data. It will be more difficult to track these errors in the network of data, having to spend a lot of time trying to find them and correct them.

<h3>Less Visibility &amp; Transparency&nbsp;</h3>

In a month-end closing procedure, it is crucial to have good visibility into all the data and audits. But when there are manual tools involved such as spreadsheets, there will be limited visibility as it is difficult to gather insights and analytics.

This, in turn, makes it difficult for the team to perform in-depth audits for financial planning as well as results in poor decision-making.

&nbsp;

<h2>How Can Automation Help Improve Your Month-end Accounting?&nbsp;</h2>

With technology and innovation taking over, automation seems like an ideal solution to speed up and efficiently perform the month-end accounting process. Once automation software is set up, all needed is a few clicks here and there and the software takes care of the process.

By reducing manual work and setting up automation in place of highly repetitive tasks, you can streamline the month-end close procedure. It saves a lot of time for the team, allowing them to focus and improve on other strategic tasks and audits.

Automation can also help improve control and security over risks and errors, leading to fewer to no errors. This can bring well-organized data, accurate and complete, enabling the team to audit efficiently without worrying about errors and having to correct them in the middle of the process.

Month-end close automation provides access to increased visibility and transparency, empowering the team with detailed insights and real-time analytics, for better decision-making and financial planning and reporting.

In the month-end close process, one important area that can be automated is accounts receivable management. Accounts receivable refers to the payments owed by the customers to the business for the purchases made on credit. By automating workflows, reminders, and invoicing, the team can save a lot of time and resources on these repetitive and mundane tasks.

<a href="https://www.maxyfi.com/" target="_blank">Accounts receivable automation</a> can also improve visibility into data, helping to identify delinquent accounts as well as gather insights into the customers&#39; credit health and top debtors of the business. This can help to implement effective collection strategies, reduce DSO and recover debts, times before the end of the month.

An efficient and streamlined accounts receivable management can also bring in good cash flow for the business. Thus, it&#39;s important to automate the accounts receivable process in order to have stress-free month-end accounting, so that you don&#39;t have to worry about unrecoverable debts and not being able to close the books.

Maxyfi, an <a href="https://www.maxyfi.com/account-receivable/features">accounts receivable automation software</a>, can help you get started easily.

Automate your AR process with Maxyfi and see how easy it&#39;s to do your month-end close!

For more related blogs and tips, keep checking <a href="https://www.maxyfi.com">Maxyfi blog</a> !

&nbsp;

&nbsp;

Month-end close can be stressful for financial teams. Automating the accounts receivable process makes it efficient and easy to perform month-end accounting. Read the blog to know how.

Make Your Month-End Accounting Stress-Free With Automation

The collection Effectiveness Index (CEI) refers to the key performance indicator used in accounting to measure the quality of the collection processes. This metric helps in determining how effectively the collection strategies are adopted to ensure timely payments and stable cash flow for the business.

Now you know what the collection effectiveness index is, let&#39;s discuss how to calculate it and why it is important in accounts receivable management.

<ul>
	<li>
	What is the collection effectiveness index in accounts receivable?
	</li>
	<li>
	What&#39;s the difference between the collection effectiveness index and DSO?
	</li>
	<li>
	How to calculate the collection effectiveness index (CEI)?
	</li>
	<li>
	Why is the collection effectiveness index (CEI) important?
	</li>
	<li>
	How to maintain a good collection effectiveness index?
	</li>
</ul>

&nbsp;

<h2>What is the collection effectiveness index in accounts receivable management?&nbsp;</h2>

In accounts receivable, Collection Effectiveness Index (CEI) is an important metric that can help AR collections teams identify the efficacy of their collection methods. It helps the business understand the performance of the credit control and collection teams.

When it comes to accounts receivable management, it is crucial to understand how the collection strategies are working for the business, and whether invoices are paid on time without disrupting the business&#39;s revenue. Hence, the collection effectiveness index gives an idea of the same, and it is calculated with the accounts receivables collected over a specific period.

Most often, the collection effectiveness index is confused with <a href="https://www.maxyfi.com/blog/days-sales-outstanding" target="_blank">Days Sales Outstanding (DSO)</a>, since both of them have almost similar interpretations. But they are different metrics to measure different values.

Let&#39;s have a look at the differences between CEI and DSO.

&nbsp;

<h2>What&#39;s the difference between the collection effectiveness index and DSO?</h2>

&nbsp;&nbsp;

<table>
	<tbody>
		<tr>
			<td>
			Collection Effectiveness Index
			</td>
			<td>
			Days Sales Outstanding
			</td>
		</tr>
		<tr>
			<td>
			Measures the quality of the collection processes.
			</td>
			<td>
			Measures the time taken to collect the receivables.
			</td>
		</tr>
		<tr>
			<td>
			Determines the effectiveness of the collection processes.
			</td>
			<td>
			Determines the average number of days taken to collect receivables.
			</td>
		</tr>
		<tr>
			<td>
			Higher CEI indicates regular timely payments and good-performing collections team.
			</td>
			<td>
			Lower DSO indicates strong collection policies and faster cash flow.
			</td>
		</tr>
	</tbody>
</table>

&nbsp;

The powerful combination of CEI and DSO provides valuable insights into your collection methods, the health of your cash flow as well as the performance of the collections team. It is an efficient tandem for any business to manage its accounts receivable while bringing in revenue.

&nbsp;

<h2>How to calculate the collection effectiveness index (CEI)?&nbsp;</h2>

&nbsp;

<div style="background:#eeeeee; border:1px solid #cccccc; padding:5px 10px">(Beginning AR + Credit Sales/N) - Ending Total AR&nbsp;&divide; (Beginning AR + Credit Sales/N) - Ending Current AR</div>

&nbsp;

Beginning AR: The Accounts Receivable amount collected at the beginning of the period.

Credit Sales/N: The number of credit sales made during a specific period, where N refers to the number of days.

Ending Total AR: The open receivables collected, current and overdue, at the end of the period.

Ending Current AR: The total collections received for credit sales made during the period.

&nbsp;

<h2>Why is the collection effectiveness index (CEI) important?&nbsp;</h2>

The collection effectiveness index is a financial ratio that can provide insightful information on your credit control management. It helps you understand the efficiency and performance of the collections team in collecting the receivables timely.

The effectiveness of the collection team to turn unpaid invoices into cash flow is one of the strongest strengths of a business. Thus, the CEI shows the quality of the collection team&#39;s work, bringing cash flow to the business.

It also measures the rigidity of your collection practices, helping your business understand how the strategies are working for accounts receivable collection. It is important because it gives you increased visibility into your credit control policies, and helps identify how you can improve them to increase timely collections.

The CEI can be used to identify the effectiveness of the collection methods in a business over a particular period, like every month.

&nbsp;

<h2>How to maintain a good collection effectiveness index?&nbsp;</h2>

A good collection effectiveness index (CEI) that is near 90-100% indicates that maximum accounts receivable are collected on time, or that the collections team is efficient in collecting all the accounts receivable timely.

&nbsp;

<h2>&nbsp;Here&#39;s How You Can Achieve A Near 100% CEI!&nbsp;</h2>

<ul>
	<li>
	Send Accurate And Correct Invoicing On Time
	</li>
	<li>
	Offer Different Payment Options For Seamless Transactions
	</li>
	<li>
	Improve Your Credit Policies And Payment Terms, Especially With Delinquent Accounts
	</li>
	<li>
	Improve Customer Communication For Positive Experience
	</li>
	<li>
	Automate Reminders And Follow-up With Customers Regularly
	</li>
</ul>

&nbsp;

If you haven&#39;t been able to monitor your accounts receivable lately and gather in-depth insights and KPIs, then you need to try automating your accounts receivable.

It&#39;ll save you a lot of time and resources while letting the <a href="https://www.maxyfi.com/" target="_blank">accounts receivable&nbsp;automation</a> software track and keep a record of all the useful insights such as the collection efficiency rate.

Stay tuned to our <a href="https://www.maxyfi.com/blog" target="_blank">blog</a> for more accounts receivable terminology, industry updates, and tips!

&nbsp;

&nbsp;

Read the blog to understand collection effectiveness index and how it can help improve your accounts receivable collection strategies for better cash flow.

Maxyfi | Accounts Receivable Collection Effectiveness Index

Collection Effectiveness Index (CEI)

Do you know, 51% of small businesses don&#39;t use any cloud accounting or financial books?

Yes, that&#39;s right!

In this age of deep-rooted technology and innovation taking over every aspect of our lives, there are still businesses and service providers who manually handle the accounting and finances, either with spreadsheets or pen and paper.

According to a survey by SMB Group, 51% of small businesses with around 1-20 employees don&#39;t use any cloud accounting software to manage their accounts receivable.

Among them, 30% of them use spreadsheets to maintain records of their finances and receivables, while 21% of them don&#39;t use any tool or software to keep a check on their financial growth.

Well, here&#39;s the catch.

What if the business wants to automate its accounts receivable management?

Let&#39;s take this discussion a step at a time.

&nbsp;

<h2>A Case Scenario&nbsp;- Without Cloud Accounting Books</h2>

Imagine yourself having a business that does not rely on any cloud-based accounting software but instead depends on your co-workers to handle the accounts receivables manually.

One day, you and the other executives in your business decide that it would be better to automate the accounts receivable process.

You then look for accounts receivable automation software that can improve the collections cycle while reducing the DSO of the business.

However, none of them allows you to add data manually or upload your accounting files, but instead, ask to integrate your cloud-based accounting books which you don&#39;t have.

You are lost now, out of options while your business&#39;s cash flow is still stuck and your team is trying their best to revive the collections faster.

This is where Maxyfi comes in.

&nbsp;

<h2>Maxyfi &ndash; Upload Accounts Receivable &amp; Automate For Better&nbsp;&nbsp;</h2>

&nbsp;

Maxyfi, <a href="https://www.maxyfi.com/">Accounts Receivable Automation</a> Software, enables you to upload accounting files in .csv format or use the template provided to add the data manually.

This feature is developed with the inclusive needs of every business in mind and stands apart from the rest of the other accounting solutions because it allows companies to integrate data without having a cloud accounting book.

Thus, Maxyfi makes <a href="https://www.maxyfi.com/account-receivable/features" target="_blank">automating accounts receivable</a> accessible for every business, irrespective of the tool or software they use to record their data.

All you need to do is sign up and upload your data with a few clicks, and everything is integrated into the software quickly and effortlessly!

Each detail is taken with great care to ensure that all kinds of businesses can avail of the software, for better accounts receivable collections and revenue growth.

The accounts receivable automation software empowers your business to follow up regularly with industry-best workflows, customizable templates, and a dedicated customer portal to communicate efficiently with customers.

All in all, Maxyfi helps your business improve collections, reduce DSO and stay on top of the cash flow always.

To know more about Maxyfi&#39;s unique stand-out features that make collecting accounts receivable simple yet efficient, stay tuned to our <a href="https://www.maxyfi.com/blog">maxyfi blog</a>.

We&#39;ll surely come back to you with more and better!!

&nbsp;

&nbsp;

No cloud accounting books to automate your accounts receivable? Read the blog and learn how to automate your AR process without accounting book APIs.

APIs to Automate Accounts Receivable?

No Accounting Book APIs to Automate Accounts Receivable? We Have A Solution!

The right&nbsp;<a href="https://www.maxyfi.com/about">accounts receivable management</a> can positively impact the business&#39;s cash flow and assets.

When accounts receivable are managed efficiently, it can result in an improved collection cycle, faster payments, better customer relationships, and increased cash inflow. Or else your business will struggle with slow or no payments leading to cash flow disruptions, bad debts, and credit risks!

Thus, it is crucial to have an Accounts Receivable Manager who can efficiently handle and maintain the accounts receivable on behalf of the company.

An AR Manager also has to manage the team and ensure they work following the company&#39;s principles, while overseeing timely accounts receivable collections, handling no-show payments, and performing credit checks, invoicing, and billing processing.

As an AR Manager, you have to carry the weight of the company&#39;s accounts receivable on your shoulders which can be burdensome. Instead of spending a lot of time and resources, it&#39;s best to invest in advanced accounting solutions like automation and make accounts receivable management easier.

&nbsp;

<h2>Accounts Receivable Automation&nbsp;</h2>

Accounts receivable automation or AR automation refers to automating the accounts receivable management activities such as creating worklists, following up regularly, sending reminders, auditing data, and other monotonous tasks.

An AR Manager needs to implement automation in accounts receivable management because it can enhance the accounts receivable process, making it less tedious and more streamlined for the team. This can also help you receive detailed reports, gather insights on payment collections, handle customer disputes, and perform credit checks efficiently.

&nbsp;

<h2>Digitalize Accounts Receivable Management&nbsp;</h2>

By digitally transforming the accounts receivable process and automating repetitive tasks, AR managers can delegate activities that motivate the team to add value to the business, such as focusing on improving customer experience, etc. It helps the AR manager to have a more hands-on approach to the team, relentlessly supporting them and encouraging streamlined operations.

This will enhance the work productivity as well as empower the team to devise better collection strategies, and communication techniques and bring dynamic solutions to the table.

With automation, Accounts receivable managers can effectively monitor invoicing and billing procedures, oversee timely payment collections, document dispute cases and handle them constructively. It also aids them in keeping detailed and accurate records, implementing better debt collection strategies, and ensuring proper functioning at each step of the collection process.

Automating accounts receivable management can also help the business in the long run. By initiating an advanced step into technology and innovation such as accounts receivable automation software, AR managers can elevate the financial growth of the business.

An <a href="https://www.maxyfi.com/">accounts receivable automation</a> software can simplify AR processes, and ensure efficient collection cycles and timely payments. This will give the business the cash flow and working capital to grow, develop and strive in the industry. After all, cash flow is the principal asset of every business to promote its full functioning.

Ultimately, automation can streamline accounts receivable management while ensuring better cash flow for the business, thus making it all the simpler for AR managers!

Make work simpler now with Maxyfi, and keep your team happy!

<a href="https://id.maxyfi.com/auth/realms/maxyfi/protocol/openid-connect/auth?client_id=mx-bs-fe&amp;redirect_uri=https%3A%2F%2Fapp.maxyfi.com%2F%3F_gl%3D1*17ag26v*_ga*NzQzOTA5NzQ5LjE2NjE3NzA3OTA.*_ga_ZSR29M9FZD*MTY2NzYyNjQ3Ni42MS4xLjE2Njc2Mjk4NjcuMC4wLjA.&amp;state=ac91a594-9d1b-40fc-a224-c1c3282e5903&amp;response_mode=fragment&amp;response_type=code&amp;scope=openid&amp;nonce=8124cd1e-73b8-4ece-a567-4f0271d43678">Get started here</a> to automate your accounts receivable management and stick around for more industry updates and tips on accounts receivable management with Maxyfi!

&nbsp;

&nbsp;

An AR Manager oversees the accounts receivable on behalf of the company while managing the team. Learn how automation can simplify the AR process!

Our Blogs

Most Popular

Make Your Month-End Accounting Stress-Free With Automation

Collection Effectiveness Index (CEI)

No Accounting Book APIs to Automate Accounts Receivable? We Have A Solution!

Accounts Receivable Automation For AR Managers

Recent Post