The way of finance processes is all going in the same direction. First, we digitize. Then we automate. Lastly, we power it up with artificial intelligence. This is how we create the intelligent finance function or Finance Function 4.0, as I have termed it—a function enabled by technology and driven by people.
Lately, we have discussed how one of these processes—accounts receivable—can be digitalized, automated, and used to drive a better customer experience and higher customer satisfaction. In many ways, this is the future of accounts receivable—a process taking its place in the intelligent finance function.
It’s the story of a transformation of a dusty, old, and broken process involving lots of headaches to a now almost automated inflow of cash in your company. It’s also a story of how finance, enabled by technology, can free itself from transactional processes and use the time to generate new customer insights that will inform better decision-making. It’s a great success story if you ask me!
A Showcase for the Future of Accounts Receivable
Granted, all companies might not yet have arrived in this great future. Some are still on the journey while others are considering how to best get started. Let’s create a small showcase for how the future should look.
Here are some of the considerations you should make for each step in your accounts receivable process:
Cash Application—automate application of payments to invoices faster and more accurately, providing visibility and control with less manual effort
Credit & Risk Management—apply a dynamic customer segmentation and be alerted whenever a customer profile changes, e.g., they do more business with you or change their payment pattern
Collections Management—leverage pre-built industry-leading collections strategies and include all data about a customer to decide on the collections process
Disputes & Deductions—swiftly record and monitor disputed transactions and integrate disputes data into your CRM system
Team & Task Management—prioritize actions across the team to get the maximum impact and measure the effectiveness of your team vs. their productivity
AR Intelligence—analyze customer behavior and patterns to inform data-driven decision-making about individual customers and segments
There are a lot of considerations to make to create the intelligent accounts receivable process, however, many companies have already done it. There’s no need to worry about if it will work (for your company). Believe me, no company is so special that it couldn’t apply already built solutions.
It’s time that we move from “can it be done?” to “how can we do it and when can we get started?” Especially considering that accounts receivable is a process that touches your customers. The worst thing that can happen is that finance and a finance process sour the relationship with your customers. It doesn’t mean the customer is always right, but the customer is still the customer. The intelligent accounts receivable process will let you collect your cash and improve the relationship with your customers. It’s a win-win situation.
How to Improve Your Accounts Receivable Process
We all have a different starting point but there are multiple actions you can take to get an idea about how you are currently performing and what you can do to improve. Here’s a simple list of ideas:
How is your DSO currently vs. your target?
What does sales say about your process?
How has the cost of the AR team developed vs. the total cost of finance and total revenue?
Benchmark yourself against other companies in your industry
Interview a few customers to get their take on how you handle things
Speak with vendors about how they would re-design your process
The list is not exhaustive by any means but should be enough to get you started and point you in the right direction.
Are you satisfied with your current accounts receivable process? Do you get frequent complaints from customers or other functions? What thoughts have you had about creating an intelligent accounts receivable process? In short, are you ready to up your game on accounts receivable?
Learn more about how to drive intelligent automation using AI with our whitepaper Survive, Transform & Accelerate: Your Blueprint for Success Using Intelligent Automation.