IMPROVE DAYS SALES OUTSTANDING WITH THREE ACHIEVABLE TRICKS

Abstract

Proper financial management in any company is crucial to ensure contractual agreements that are fair and equitable to both parties. The Finance and Contracting departments are responsible for managing financial aspects such as payments, which should be as cash neutral as possible and paid approximately equal to the work performed. Days outstanding sales, measuring the days from work served to paid, is used to manage financial expectations. The aim is to manage sales in as few days as possible, generally within 30 to 60 days, depending on the industry. Modifications to study expectations that require a change of delegation or price should be incorporated formally into the contract file to protect each party. Urgent work may require additional full-time equivalents allocated to the program, which could impact headcount and legally delegated authority. Nevertheless, the company should not proceed without written permission, as it is a significant financial and legal risk. Proactive communications regarding financial packages, such as completed units and projections, may mitigate the risk, as changes shouldn't surprise. Written approval will clearly show auditors and regulatory bodies the modification to delegated work. The purpose of this paper is to emphasise the importance of proper financial management and communication to minimise financial and legal risks. We aim to provide insights into managing finances and contractual agreements by discussing the responsibilities of the Finance and Contracting departments. We also provide recommendations on proactive communication and written approvals