What's new on Summit

Financial Planning Software as a Service

Improvement
March 27, 2020

Accounts Receivable, Collections, and Dunning 📆

As anyone close to billing can tell you, invoicing and collections are not the same thing. Especially in enterprise SaaS, where the time between sending a customer invoice and collecting cash can be upwards of 3 months.

Even for companies relying on credit card payments, according to Chargebee, the first charge fails nearly 6% of the time.

To account for these challenging realities, the simulator inside Summit now collects cash at an offset from invoicing, depending on the size of the transaction. For non-credit card transactions, while NET 30 (cash collected thirty days after invoice) is the most common, Summit uses a normal distribution to simulate delays (aging) of up to 6 months.

For credit card payments, payment terms are assumed to be NET 0 (pay immediately); however, Summit will now simulate the failure (and need to retry these charges) up to 5.95% of the time.

These changes provide users of Summit with a more realistic stress-testing of cashflow.

Here is a cash balance forecast for an enterprise SaaS before these payment terms are incorporated. We are showing 5 forecasts to illustrate a range of possible futures:

And here is a forecast for the same business, with realistic payment terms:

Users will see the effects of this change the next time they generate their baseline forecast or growth plans.

emoji negtive reaction emoji neutral reaction emoji positive reaction
Thanks for your feedback
Create your own newsfeed