IT firms ask clients to pay bill on time
By siliconindia   |   Friday, 23 January 2009, 18:04 IST   |    2 Comments
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IT firms ask clients to pay bill on time
Chennai: In the midst of deepening economic crisis, Indian IT firms are asking their clients to pay the bill on time as there may be a default or delay in paying bills since most of the clients are feeling the heat of the downturn. Indian top IT companies such as TCS, Infosys, Wipro and even the small companies have improved the collection of receivables by five-six days on an average during the third quarter ended December 31, 2008 ,reported The Economic Times. As per the data released by major firms during their respective earning calls, the number of DSO (day sales outstanding) days or debt days, an indicator which points to the time within which vendors get their clients to pay up, has come down. This is a clear indication that the firms are speeding up the process of collecting receivables. As a result of it, TCS has reduced DSO days by nine, Wipro by six, Infosys by four and Polaris by 10. "This quarter, the DSO days basically went down because in an environment like this, we said we have to go behind all customers and make sure we collect money on time because this is an environment where people have lot of challenges on the liquidity front. So, the DSOs actually came down because we are aggressive in collecting the money. In spite of more holidays in this quarter our sales force went out and collected most of the dues form the clients," S Gopalakrishnan, Infosys CEO told analysts in an earnings call after announcing the firm's third quarter results last week. Industry officials and analysts say a lower DSO is good because it implies that a firm manages its cash flow well because it collects the money on time or earlier and in troubled times the sooner one gets cash in hand, the better. The receivables, if realised quickly, can be redeployed for other purposes or can even help in adding to the interest income of the firm.

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