Best Practices for Implementing an Accounts Receivable Solution

Whether your organization implements a new finance system “all at once” in parallel with your existing system or in phases, it can be daunting. None of this happens overnight, and many things can go wrong if the process isn’t managed in a methodical way.

The digital transformation journey typically takes about three years, and the path is often paved with hiccups, miscommunication, stalls, and failures. According to a Deloitte study, 70% of such projects fail. This tracks with responses from a BlackLine webinar where audience members were asked to share their experiences in updating their systems—more than half said they had struggled.

Technology is usually not the main culprit—problems tend to come from the human side. Team members can lack a sense of urgency, be reluctant to adopt a new system, have a fear of change, or be unclear about objectives and goals, according to Deloitte.

The positive side of implementing new accounts receivable (AR) systems is clear, and most adopters find that they don’t have to succumb to a series of Murphy’s Law-type outcomes. On the contrary, AR leaders and teams often receive phenomenal value from embarking on the AR transformation journey.

We should provide this caveat, however: the customers who often gain the most from change transformations tend to be open to new AR implementation best practices rather than trying to put their existing process into the software. Additionally, they often stay engaged throughout the process, properly staff project teams, and have clear goals and objectives.

Before discussing those practices in more detail, let’s start with this basic question: why change an AR system at all?

The potential pitfalls of not implementing a new AR system and staying with status-quo technologies and manual processes are well known. There are transactional failures that lead to added cost and wasted time, not to mention the frustration of having to continually chase payments using inefficient means.

But what are the benefits of moving forward with implementation? Considering the time and cost of embarking on such a project, why should an organization even consider such a change? In the end, what’s the payoff?

When businesses manage the process well and institute implementation best practices, the benefits are indeed huge, including:

• Fast, accurate processing of transactions. An optimized, automated AR operation generates faster application of payments, fewer payments on accounts, cleaner ledgers, and improved working capital.

• System-wide visibility. Organizations gain visibility into numbers and metrics that previously would have been invisible due to opaque, siloed operations.

• Increased productivity. Accounting, finance, and treasury teams manage data consistently and reliably. Their projections and bad debt preserves are accurate, and they no longer spend time chasing payments.

• Improved customer experience. Customers will appreciate that they’ll receive fewer calls about payments that have already been made and not applied or are scheduled, because the system accurately tracks payments and processes them quickly.

• Precisely targeted sales efforts. Sales teams are able to work more efficiently, developing customer profiles that accurately track payment behaviors and build a true picture of all payers.

• More informed treasury. Because the system continually monitors payment behaviors—enabling treasury to get an accurate read on all payers—it enables more accurate payment forecasting of customer payments.

Clearly, the benefits of implementing an AR solution far outweigh the risks of the status quo, but positive outcomes can only be achieved when organizations follow best practices that pertain to three key areas of implementation: strategy, change management, and back-end monitoring.

A successful AR implementation must begin with a solid organizational strategy. If accounting leaders fail to take the time to develop such a plan, the system will be racked with inefficiencies. But where to start? Many organizations make the mistake of wanting to jump on the most glaring issues. Try to avoid that tendency and, instead, develop a strategy that addresses the entire AR ecosystem in a sustainable way, even as leaders and team members change roles or are replaced.

John Wolf, an AR subject matter expert at RSM US LLP, who often undertakes change management programs with his customers, says leaders of an implementation strategy should answer key questions about goals and objectives, such as:

• What are our goals in implementing this new system? Where must we build in efficiencies? What are the short and long-term AR objectives?

• What is the scope of these changes, and how will we prevent scope creep?

• What key performance indicators (KPIs) will properly measure and determine if we’ve met them or where we’re falling short? Examples could include unallocated cash, lockbox processing fees, or the time needed to key payments into the ERP or to process or collect payments.

• What governance policies must be put in place that set rules for an optimized AR system?

• Who are the internal and external stakeholders who must be informed about this change and agree to it? Which leaders and team members will champion this change?

• What issues must be addressed by adopting new technologies? What manual processes routinely slow down accounting transactions? Where can automating processes make a positive impact? 

• What are the parameters, criteria, and qualifications for deciding which vendors to research and interview?

• When does it make sense to handle processes internally or contract with an external partner?

Once you have your implementation strategy in place, says Wolf, you can launch into a comprehensive and critical part of the process: change management. Change management defines a systematic approach to transforming complex systems. In the world of AR, employing change-management best practices involves communication, user acceptance testing (UAT), training, and support.

As the aforementioned Deloitte article points out, most of the issues organizations contend with when they’re implementing a new solution are rooted in human decision-making or “the psychology of an individual or team.” To overcome resistance to these changes, it’s critical to educate, update, and encourage buy-in from all stakeholders and team members and start that process early on.

As part of the strategy phase, you should have already identified all the individuals with whom you need to engage. The sooner you begin to communicate with those people, the easier it will be for things to keep moving forward and to meet your go-live schedule. It begins by making sure that everyone (including IT) understands the problems that should be solved and the scope of the changes that are to take place. Keep information easy to follow, positive, and consistent.

This communication should continue throughout the entire implementation period, including the scheduling of regular meetings to further inform teams and answer questions and the setting up of a system to offer technical support. Change always carries some degree of fear, concern, and resistance, but you don’t want pushback because people feel surprised or that they were left out of the loop.

UAT is the part of the process in which team members—the ones who will actually be using the solution—ensure that the product is fully functioning by the time the system goes live. It also keeps them engaged in the implementation process, as they should be encouraged to provide positive and negative feedback.

Testing should involve real-world scenarios, so users encounter next to no surprises when the solution is fully implemented. And as they begin to see how much time is saved through automation features, they’ll grow to greatly appreciate the value of this change.

Training can take the form of in-person or online education, user guides, videos, and recorded training sessions. Teams can also enroll in BlackLine U’s learning portal, which offers excellent training materials and classes. Another option is to partner with a training provider that specializes in the specific business of your organization. This is also the stage where users are most likely to access support channels.

Once your system goes live, the final few kinks have been worked out, and things are running smoothly, it’s imperative to continually monitor the system to ensure that it’s running at peak functionality and without issues. This is especially true as the system expands to scale and it’s introduced to new individuals.

Another aspect of this phase is the continual measuring of KPIs, where metrics are revisited to ensure the system continues to meet the needs of the organization and where improvements might need to be made. Even the best strategies have some aspect of evolution and minor adjustments should be expected.

With all the monitoring that a new AR system requires, there’s one sure way to know that it’s running smoothly: Things are quiet. That is, when the system is leveraging automation features that allow transactions to be streamlined, teams aren’t even aware that the system is continually processing massive numbers of transactions. When teams are rarely being alerted to issues and instead managing by exception, they are freed up to devote more of their time to perform meaningful, strategic tasks and benefit the entire enterprise.