Accounts receivable (AR) automation is the most practical, efficient, and cost-effective way to process your AR, so what’s keeping you from making the switch?
Working with finance teams around the world, we’ve found that there are some common misconceptions about AR automation that prevent teams from upgrading. However, we’ve never encountered an excuse that held up under closer examination.
That’s why we’ve compiled a list of the most common excuses for not adopting an automation solution. By looking a little closer at the reality of each, you can start building an air-tight case for making the change.
Excuse #1: This is how we’ve always done things
Don’t get us wrong. We believe that there is a value to tradition, but only when those traditions make the business better. The simple fact of the matter is that manual accounts receivable not only increases the chance of late payments. It also makes the process of intelligently collecting accounts receivable more difficult.
Take a look at your days sales outstanding (DSO). Is it as good as it can possibly be? Or are late payments an issue that your business could address more effectively?
39% of all invoices are paid late in the United States alone.
So, what exactly is driving late payments? According to Forbes, 61% of all late payments are the result of incorrect invoices. That’s the risk you run when you manage invoicing manually and use a variety of software that doesn’t integrate together. The process of manually inputting information from your CRM and ERP leads to mistakes, which in turn feed late payments and drive up your DSO.
The challenge doesn’t end there. When it comes to forecasting and understanding customer payment behavior, manual methods are complicated and time-consuming. Data entry errors are common and can skew the numbers. In addition, manually handling the calculations for predictive analytics is a complicated process and it takes your team away from focusing on strategic collections.
By adopting an AR automation solution that makes use of AI and machine learning, you eliminate this concern. Detailed reports can be created with the touch of a button, and the data is contextualised in easy-to-understand graphs and charts. The AI aspect makes predictive analytics a breeze. Using algorithms to analyse customer payment behavior, the software can accurately determine which invoices are likely to be paid late and when you can expect to receive payment. Because machine learning is involved, the more often the technology is used, the more accurate it becomes. With up to 94% accuracy, it provides you with a nearly flawless picture of your future cash flow.
Excuse #2: We don’t have the IT resources
We get it. Like accounts receivable teams, IT teams are often overworked and stretched thin, meaning that adopting any new technology can seem unmanageable. However, in our experience, legacy AR management solutions place an even greater strain on your organisation.
Working between multiple systems, IT teams are frequently called into action when things inevitably go wrong. They are asked for quick fixes and band aid solutions that will help the systems work alongside each other. On top of this, they are also expected to help create custom reports to ensure that the AR department is working with the data they need.
With an AR automation solution, it’s a “one and done” situation. Once IT has handled the installation, the software is easy to maintain and essentially runs itself. Custom reports can be made with the touch of a button, and the software offers a user-friendly, no code interface, which means that adjustments can be made without any technical expertise needed.
Implementation of an automation solution doesn’t need to cause anxiety. With Quadient AR’s AnySync service, our in-house team will design a bespoke integration to seamlessly connect to your ERP, with data upload available in virtually any format. Integration can be completed in a matter of days, not weeks, and you’ll gain automatic, bi-directional data sharing between Quadient AR and your ERP, such as Microsoft Dynamics 365 (NAV) or Microsoft Dynamics GP once implementation is complete.
That means your organisation gets to work with a top-notch team adept at integrations and committed to simplifying the process. Imagine the relief that will provide your IT department!
“The project managers have been fantastic. Not just in onboarding teams onto the platform but in providing ongoing support and value. We’ve built a real relationship with them and it feels like they’re invested in their relationship. Even better? The tool is painfully easy to use. We got people together for one day and that’s all we needed to onboard them.” – Susan LaRosa, Director of Credit, WS Audiology
Excuse #3: The alternative is too expensive
This is probably the most common reason excuse used to avoid adopting an automation solution. There seems to be a prevailing opinion that the cost of any new software will exceed the benefit. The truth is just the opposite.
According to Atradius, businesses in the Americas lose 51.9% of the value of their receivables that are not paid within the first 90 days.
Numbers like this highlight an important truth. Late payments don’t just slow down your cash flow, they cost you money. The longer an invoice goes unpaid, the more value it loses and the less likelihood there is of collecting the full amount. In fact, Dun & Bradstreet has found that after 90 days, the likelihood of the invoice being paid at all drops to 69.6%. If that same invoice manages to reach 12 months past due, that likelihood goes all the way down to 22.8%.
Given the established connection between manual accounts receivable practices and late payments, that means that the “business as usual” approach is actually costing you money.
By contrast, adopting an AR automation solution like Quadient AR by YayPay puts money back into your pocket. A study conducted by Forrester found that Quadient AR generated a 400% return on investment over the course of three years. Breaking that down, Forrester discovered that the software led to the following improvements.
- Improved AR workflow automation and team efficiency by 25% - this benefit total equated to $424,000 over three years.
- Collected 25% more through reduced write-offs. AR automation makes collections consistent. This benefit total equated to $234,000 in present value revenue over three years.
- Reduced legacy costs by $52,000 over three years. Organisations were able to retire costly payment processors, ERP modules and management resources.
Excuse #4: We don’t want to lose the personal touch
Another common reason businesses avoid automation is a desire to keep the human touch in customer interactions. It’s understandable. After all, PricewaterhouseCoopers has found that 59% of consumers feel that businesses have lost the human element of customer experience.
Though it might seem counterintuitive, automating the AR process actually allows your receivables team to inject MORE of the human element into customer interactions. That’s because manual receivables require your team to spend hours on tasks such as invoice creation, invoice delivery, data entry, compiling detailed reports, and more. That leaves little to no time for your AR team to work strategically or engage in the relational side of the business.
By automating back-office tasks, members of the accounts receivable team are freed to focus on working directly with high-risk and high-value accounts. They have the time to provide white glove service when necessary and work with potential problems accounts to ensure payments are made in a timely manner while respecting the challenges a customer may be facing.
“... this is a more enjoyable experience for the customer. It doesn’t feel punitive; it feels collaborative.” - Susan LaRosa, Director of Credit, WS Audiology
Want to discover more ways to create an airtight case for AR automation? Download our on demand webinar at the link below.
