BlackLine Blog

May 09, 2023

What You Need from a Best-of-Breed AR Solution & Why Your ERP Won’t Give You All You Need

Intelligent Automation
5 Minute Read

Danny Wheeler

Share Article

Accounts receivable (AR) teams work with a ton of data, and very often, they rely on enterprise resource planning (ERP) software (such as SAP, Oracle, and D365) to manually process the lion's share of those transactions. It’s not always smooth going. Vital nuts-and-bolts tasks, such as reconciling invoices and running reports, frequently take longer than they should with the result requiring further analysis in Excel.

Given the cost and effort of migrating or upgrading, ERPs are often kept around well past their prime. While useful for completing basic functions, such as storing data and tracking when invoices are due, they lack the advanced functionality that today’s AR teams need to highlight and manage risk and change while quickly and efficiently processing thousands, or even millions, of transactions each week.

Sizable enterprises invest heavily in ERPs, motivating finance leaders to get the most out of them, but they should consider the compromises and costs, as well as what’s needed to optimize AR operations, so they can be managed more efficiently.

ERPs Are Good Enough, But Not Great

While ERPs will likely always be the system of record for the data and can perform basic AR functions, they do not offer capabilities for harvesting AR insights and automatically extracting actionable intelligence. ERPs generally require that processes be done manually, inviting the possibility of human error and for inaccurate data to infect the entire ecosystem. A single error can result in team members scrambling to figure out just where things went wrong. ERPs also have little to offer in the way of learning. Some organizations still use spreadsheets and “little black books” to track what customers owe and have remitted, as well as the person or company name that corresponds with remittances.

A business can receive payments using a lockbox service that outputs a data file that some ERPs can process, but it’s costly to go this route and leaves organizations vulnerable to the same issues of manual processes—errors, missing data, and no learning which hinders automation.

To fully appreciate how important it is to optimize AR processes that only rely on ERPs, think of the Boeing 747. Developed in 1970, it was the first “jumbo jet,” a massive, four-engine aircraft that could transport up to 524 passengers. With its twin-aisle layout and a spiral staircase that led to an upper-deck lounge, the “queen of the skies,” as it was called, dramatically changed long-distance travel. Boeing stopped production of the 747 this year, and most commercial airlines stopped flying it years ago, because they needed something more efficient and less costly, opting instead for two-engine jets that can carry nearly the same number of passengers for a longer distance.

Best-of-Breed AR Solution

AR teams need a more efficient and less costly way to manage huge amounts of data and the processes that flow from that information. Or, put another way, a best-of-breed solution that leverages the data-storing muscle of their current ERPs while offering the following benefits:

  • Saving time by replacing manual processes with automated ones.

  • Reduction of mistakes and re-work and improved operational confidence from processing highly accurate data.

  • Reducing intra-company conflicts with clearer processing of cross-ERP payments.

  • Improved morale among team members as jobs change from processing to exception management and investigation.

  • Reduced risk of unpaid and defaulting customer accounts as the system alerts changes in customer behavior.

  • Significant reduction of month and quarter-end close times as all received payments are processed the same day.


5 Key AR Capabilities to Look For

There are five key capabilities that a best-of-breed AR system must have to accomplish meaningful AR optimization. They are the following:

1) Process automation

Optimized AR systems leverage automation that does away with manual processes that waste time, delay a close, and introduce errors. For example, they use Optical Character Recognition (OCR) to scan documents and extract needed customer payment data preventing the need to key in data and reducing related mistakes. This can be especially helpful for remittances that are paid by check.

Another automation technology is machine learning which can analyze scads of data, identify patterns, and continually feed a growing knowledge base of customer behaviors. It is also excellent at identifying and alerting aberrant behaviors that require human intervention. Automation technologies save staff time in everything they do and relieve them of the burden of verifying the accuracy of data. Instead, they can manage by exception and spend their time performing meaningful tasks.

2) A unified platform

Many corporations, especially those that have been acquiring new entities, find themselves struggling to navigate a network of disconnected, disjointed systems. Sometimes they’re dealing with a string of ERPs that can’t talk to each other, leaving staff with the time-consuming tasks of connecting dots and filling in gaps.

A unified AR platform, on the other hand, has vital “nerves” that extend throughout the entire ecosystem connecting departments and technologies so that all teams are working with a Single Source of Truth. This is particularly important when a digital audit trail is needed, but it also greatly optimizes processes on a day-to-day basis. For example, when an invoice is paid in the cash tool, it would close out a promise to pay that a collector had open.

3) Fewest possible number of touch points

An optimized system is nearly “touchless” in that the technology, not humans, does most of the work. Data is processed quickly, efficiently, and accurately throughout its journey. Take, for example, invoice matching. Unlike an ERP that may only automatically post to a customer’s account (requiring someone to complete the process by finding the matching invoice), a best-of-breed system can match to transactions using all kinds of learned customer behaviors so that they’re reconciled on the spot.

4) Shared visibility throughout the enterprise

One of the most powerful attributes of a unified platform is end-to-end visibility, particularly in scenarios in which companies are running operations in different countries with each foreign entity potentially using a different ERP and in a siloed fashion, opening the door to confusion, error, and out-of-sync data.

With a best-of-breed system, AR team members enjoy one, global view so they can instantly see where there are issues and decide what action to take. What’s more, non-AR functions can make use of the data captured in the processing to easily receive up-to-date, global reports and insights on customer behaviors, changes, and trends, or ‘decision intelligence’ that is critical to their efforts. For instance, without the number crunching in Excel, sales teams can easily identify their most promising customers and Treasury teams can more accurately forecast incoming payments based on how their customers are really paying them.

5) Seamless, scalable ERP integration

Every business, no matter how big or small, must be assured that new technology can work with the current technologies, including a string of disconnected ERPs, without requiring expensive integrations or steep learning curves. They need to be able to hit the ground running after implementation, ideally, without any downtime. Furthermore, the system must be able to seamlessly scale and grow with the enterprise, and updating the system should be automatic and fluid so that teams are always working with the latest security features.

Adopting Best-of-Breed Systems Today

AR teams need a more efficient and less costly way to process the enormous amounts of data that flows in and out of their systems, which is why businesses are stepping back to take a holistic look at their AR operations, identifying their ERPs’ limitations, and evaluating ways to optimize processes.

These strategies involve leveraging existing ERP capabilities as the system of record while also adopting best-in-breed solutions and technologies that move processing outside of the ERP to minimize manual processes, inaccurate data, and touchpoints.

The end results are the benefits that come from automated processes—drastically reduce delays, friction points, and human errors. This allows AR teams to operate with trustworthy, up-to-date, and accurate data while providing the broader organization with a new level of confidence in the information upon which they make decisions and plans.

Get your copy of this white paper to learn how intelligent automation can be used to effectively automate and manage the cash application process to help free up time, resources, and cash in your organization

About the Author


Danny Wheeler