Achieving Real-Time Visibility & Cash Flow Resilience Through AR Automation

If you work in Accounts Receivable (AR), you know the challenges of today’s economic climate and how they impact your business. Inflation and rising interest rates make it expensive to borrow money, yet they’re crucial to ensuring you collect what you’re owed. A continually depleted workforce makes it harder for your team members to complete all the work in front of them.

That’s why it’s more important than ever for AR teams to be resilient and carry out their activities as efficiently as possible. Unfortunately, though, that’s not happening for many businesses. Consider these statistics from a recent survey conducted by American Express and PYMNTS Intelligence^*:

• 68% of CEOs say payment-related delays were an issue in the previous six months.

• 77% of AR teams are behind schedule on collections.

• 81% of companies saw an increase in delayed payments over the previous few months.

But what’s even more concerning is that these delays aren’t only caused by external market forces, but issues that exist within organizations themselves. Many businesses have been slow to optimize technologies and processes. They rely on manual processes, resulting in AR teams struggling with inaccurate data and inconsistent, non-standardized processes.

According to the American Express PYMNTS Intelligence survey, only 44% of companies believe their AR teams have the tools, resources, and skills they need to contend with the current economy. 

For businesses that continue with outdated manual systems, errors are unavoidable and lead to even more delays. Customers who need to be contacted fall through the cracks, staff can’t find the time to work on value-added tasks because they’re too busy chasing payments, and there’s never enough available cash to be able to make intelligent strategic decisions. 

To improve their performance, organizations must improve efficiencies by automating processes and decision-making throughout the AR ecosystem.

But now, let’s move away from those pain points and consider a different AR world altogether — one in which AR processes are streamlined and centralized and teams manage by exception.

It’s a world in which an enterprise has adopted a solution that automates AR processes. Leveraging AR automation can provide a plethora of benefits, chief among them being the ability to make intelligent decisions because teams are working with accurate, reliable data.

When businesses take advantage of AR automation and decision intelligence, there's no more guesswork. The solution makes decisions based on historical customer behaviors, allowing teams to monitor transactions and provide guidance as appropriate. AR teams can complete activities with less stress and more confidence and meet critical goals.

Goal: Optimize working capital 
Benefit: Achieve significant cost savings and release cash

Goal: Engage your people
Benefit: Free up staff to be able to focus on value-added activities and business partnering, instead of chasing down customers for remittances

Goal: Control the process
Benefit: Create a standardized, transparent, automated, scalable and SOX-compliant process that significantly reduces the risk of human error

Goal: Improve the customer experience
Benefit: Boost customer loyalty by reconciling customer credit accounts in minutes (not days) so customer credit lines are fully available

The downside of not fulfilling these objectives — of continuing to use manual processes and legacy systems and technologies — is cash blindness.

It’s where teams work in silos. The Collections team isn’t sure what's going on with Cash, which has no idea of what’s going on with Collections - and no one is solving or gaining control over the complexities of Cash Application.

In addition, AR teams can only view transactions that have already occurred. They’re always looking in the rear-view mirror, so no one feels confident in their decision-making and forecasting capabilities.

What’s needed is end-to-end process visibility, and that’s the beauty of AR automation. It allows access to all departments’ data in real-time. That way, different functions make decisions based on the most accurate and current data and trends so that AR teams can determine the best path forward.

Days Sales Outstanding (DSO) shrink as money is collected sooner. When all processes within the AR space are automated, teams gain full visibility into activities such as Cash Application, Credit and Risk Management, Collections, Disputes, Invoicing, and Compliance.

With automated processes, businesses can offer more tailored collections processes, such as contacting customers via a preferred method or at times that suit them. Even more importantly, customers who need to be contacted aren’t missed, and customers whose accounts are overdue (whose payments are in the queue to be applied) aren’t receiving unnecessary phone calls.

With cash-flow visibility, customer credit lines are viewable, so no one is guessing as to how or when to contact customers to maximize collections. This leads to a better customer experience, and salespeople can breathe a sigh of relief when they can work with more appreciative customers!

Automating processes is also a game-changer for cash-flow forecasting. Since teams have access to accurate data in real time and a continually growing base of historical data, a business can base its forecasting on actual customer payment behaviors, so they can make projections with much more confidence.

With these insights, businesses can adjust customer relationships appropriately, even if it means making the tough decision to no longer trade with a customer whose late payments are costly to the organization.

The positive outcomes of automation reverberate throughout the AR ecosystem. Businesses have quicker access to cash, take on less risk, and improve the customer experience.

By eliminating archaic, manual processes and achieving end-to-end visibility, AR teams can work on meaningful, strategic activities. This keeps employees engaged and retention rates higher, ensuring the enterprise achieves a higher level of financial stability now and well into the future.

* “Meeting the Growing Need for AR Modernization,” American Express & PYMNTS Intelligence, B2B and Digital Payments Tracker® Series, Aug/Sept 2023.