Accounts receivable (AR) carries a heavy burden for the business. If payments owed aren’t collected swiftly, efficiently and cost-effectively, profit margins take a hit and the ability to invest for growth is affected. Effective processes and solutions can be the difference between surviving and thriving, with intelligent AR helping to keep finance on track, secure payments faster and ensure minimum fuss for the business and customers.
This is the start of a new blog series examining how to optimise AR processes to improve business efficiency, cash flow and customer satisfaction. Future blogs will deep dive into using the business’ own cash instead of borrowing, how data analytics can help with cash flow forecasting, and how, through self-service and the right communications strategy, customers can be more satisfied with payment processes. For now, this first blog focuses on automation and how the commoditisation of AR through a single platform can deliver business improvements.
Across many aspects of business, automation has transformed operations to improve efficiency and maximise results. Yet despite this, businesses often rely on manual ways of working in the AR process.
Chasing up payments is a huge drain on resources when it relies on sifting spreadsheets and accessing data from across a range of systems such as enterprise resource planning (ERP) and customer relationship management (CRM). Then there’s time and effort spent on putting together bespoke reminder letters and emails and making customer calls.
A single platform for AR process automation
Research by PYMNTS.com and American Express reveals that businesses using manual AR processes often have 30 per cent longer average days sales outstanding (DSO) compared to those that have introduced automation. That can have a significant impact on cash flow, the business’ ability to honour its own debts and the company’s ability to invest and grow. Add to that the impact of manual processes taking 67 per cent more time on average to follow-up on overdue payments, and the difference is clear.
Intelligent AR, made possible through a single management platform, centralises account finance activities, streamlines customer communications and introduces automation in place of manual tasks. It’s a digital approach to a traditional business activity that makes a considerable contribution to achieving financial objectives such as those around DSO.
A complete AR management platform can also help businesses better serve customers that wish to transition to electronic invoicing. It provides the means for them to self-serve through a secure online portal that provides convenient access to invoices and account history 24/7, and the ability to make payments.
Moreover, it supports the health of the business’ overall finance ecosystem with efficient AR bringing cash into the business on a reliable basis, so that payments that are owed can be made by accounts payable.
10 benefits of an AR management solution
A single platform that centralises and automates AR functions delivers a range of benefits including:
- Faster payments – the right intervention at the right time helps settle outstanding accounts more quickly to reduce DSO and improve cash flow.
- Time savings – rules and workflows automate the sending of appropriate reminder communications and statements through the right channel to the right person at the relevant time of the process.
- Customer satisfaction – a more efficient process makes for a better customer experience. Duplicate chasing for payments becomes a thing of the past; customers receive reliable, consistent communications and find that whomever they speak to, through whichever channel, they’re given the same up-to-date view of their account. Customers can even choose to self-serve, accessing their latest and historical invoices through a secure portal where they can also raise any disputes and make payments by credit card or BACS.
- Improved account management - a data-rich AR solution provides visibility across accounts, with up-to-date payment information and enhanced analytics that help identify the risk of bad debt before it becomes an issue. Insight into payment behaviours helps focus the attention of Finance on accounts where it is needed.
- Management information – reports can be generated quickly and efficiently from the one central system providing faster, and more granular, insight into the business’ financial health and cash flow, as well as profitability predictions.
- Efficiency – time that was spent putting together and sending reminders and chasing up payments can be better allocated to activities designed to serve customers and grow the business. Tasks are no longer duplicated, and time isn’t wasted checking with colleagues on the status of an account or the last interaction with a customer. The automated solution prioritises tasks and automatically assigns owners. This removes a management burden from employees and takes the jeopardy out of which customers get contacted, when, and some not being chased up at all if employees run out of time.
- Remote working – especially significant at this time when businesses are actively pursuing solutions that enable work to continue as normal whether employees are in or out of the office. By working from one central system, information is available to all authorised users wherever they are.
- Error reduction - a single data set that integrates with existing ERP, CRM, accounting and billing systems minimises manual data entry to reduce errors.
- Improved job satisfaction – minimising repetitive, mundane tasks such as chasing payments, makes for a more satisfying time at work and ensures skilled employees put their talents to good use on high-value activities that benefit the business.
- Traceability - a digital record of communications, customer interactions and documentation provides an accurate audit of activities and ensures that invoices can be swiftly located.
Through intelligent AR, businesses can achieve faster payments and improved ways of working. What’s more, they can better serve customers and make the best use of data for business planning. To find out more about transitioning to a predictive and automated AR management solution, take a look at YayPay by Quadient.
