Firms Leaning to Vendors for Commercial Collection Solutions

Spending on commercially available and in-house receivables and collection management solutions will grow from $1.35 billion in 2006 to $1.46 billion in 2010, as companies seek to better their cash flow and manage their risk, according to PayStream Advisors’ “Receivables and Collection Management 2.0, Emerging Solutions and Increasing Automation” report released in December.

More firms are buying these ARM products from vendors, with PayStream projecting this market will grow from $448 million in 2006 to $662 million in 2010. Meanwhile, total spending on in-house versions is greater but declining as that investment will drop from $897 million in 2006 to $795 million in 2010, PayStream reports.

The 78-page report focuses on commercial receivables and collection management. PayStream analyst David Schmidt writes that companies using receivables and collections management solutions will see greater processing efficiencies, enhanced visibility and control of company collectors and lower costs. Companies reported cost reductions of 10 percent to 20 percent in Days Sales Outstanding (DSO), 25 percent in past due receivables, and 15 percent to 25 percent in bad debt reserves.

Schmidt cites the recent Working Capital survey of Fortune 1000 companies that found these leading companies could realize a combined total of $200 billion by improving their ARM process.

In the report Schmidt reviewed the account receivables management software and software-as-a-service products from nine major vendors – 9ci Inc., SunGard AvantGard, Capgent, eCredit, ezBackOffice, Global Visions WorkflowAR, Oracle, SAP, and Sentinel. The report summarizes the provider’s strengths and weaknesses, their target market, and clients and partners.

Charlotte, N.C.-based PayStream provides financial automation technology assessments for firms in the healthcare and financial services sectors.