BlackLine Blog

August 02, 2023

Why Streamlined AR Processes Are Critical for Your Financial Close

Modern Accounting
3 Minute Read

Molly Boyle

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Perhaps you’ve heard of the expression “no regret work.” It’s work that is geared toward building a strong organizational foundation by considering how the sequencing of efforts conducted upstream benefits those that occur downstream. The idea is rooted in the value of sustainability, so that work that’s done today will still be relevant tomorrow.

When it comes to F&A, no regret work manifests in focusing on high-value work and minimizing time spent on manual, chaotic, and inefficient work, (including meetings and emails) so that all processes—upstream and downstream—are fully optimized.

The big challenge for F&A is that AR and order-to-cash processes are often highly manual and inefficient. Teams responsible for managing AR often work with unreliable or incomplete data compiled manually from a variety of sources, systems, and spreadsheets. At any point in time, there are high volumes of unreconciled, unapplied, or misapplied payments. As a result, downstream closing and reporting activities can be slowed down or have inaccurate, incomplete inputs.

When companies develop strategies that automate AR and order-to-cash processes, replacing time-consuming, error-prone manual methods they aren’t just improving AR. They’re de-risking other critical closing and reporting activities, and they’re enabling earlier, higher quality insights for internal and external stakeholders.

A Time for Transformation

Most CFOs and accounting teams know the way they’ve been working isn’t sustainable. They want to have predictive analytics, more informed planning, and clear visibility to risks and opportunities that help inform strategic decision-making. But many aren’t sure how to achieve these goals or where to begin. How can they improve their finance and accounting processes, so they get maximum results without overburdening staff and overspending on resources?

Improving order-to-cash and AR processes are a great place to start. Modernized cash application tasks let technology take the lead in efficiently recording, organizing, and reporting on customer activity, re-focusing valuable accounting staff to analyze exceptions, identify trends, and support decision-making.

This approach positively impacts key aspects of closing and reporting activities, as well. When reserve models, adjustments, disclosures, and other areas have more reliable inputs, they’re developed faster and more accurately, resulting in higher quality reporting and decision-making.

Bad Data & the Close

Many see AR as just one isolated chamber within an F&A organization, but AR issues can negatively impact myriad of other functions, “infecting” every subsequent touch and leading to inaccurate reports and financial statements that end up in the hands of tax, treasury, CFOs, investors, and auditors. Customer accounts are also impacted because AR teams don’t have critical decision intelligence at their fingertips to efficiently address invoices, remits, and credit.

It’s akin to a manufacturing plant tossing defective parts onto a conveyor belt. When those parts make their way into products that ultimately fail quality assurance tests, a team must stop and try to figure out which part or parts were causing the problem before the product ships. This results in a time-consuming bottleneck, and the company loses money because of delayed shipments. Problems are only compounded by the fact that AR processes extraordinarily high volumes of data making it highly prone to errors and chronic data insecurity.  

AR’s Data Automation “Waterfall” of Improvement

The advantages of implementing an optimized AR solution go beyond the AR arena. When the optimized AR subledger is closed, valuable, trustworthy inputs to tasks positively affect recording, adjusting journal entries, and matching. This is why BlackLine’s AR solution is designed to improve AR processes that can positively impact the entire F&A organization.

Some examples of the outcomes from these process improvements include the following:

  • Finance teams can forecast more accurately, based on visibility and gained insights.

  • Customer invoices are accurate, reducing conflicts.

  • Customer deductions are understandable because the right deduction codes are raised against invoices.

  • Credit decisions are made intelligently to better ensure that payments will be made on time.

  • Sales is better informed about customer accounts so it can be more successful in how it approaches them. 

  • Key monthly adjustments, reserve models like the allowance for bad debt, returns and other allowances reserves, and other judgments are better informed and more accurate.

The Need for Data Confidence

AR can’t be a guessing game. Whether an organization’s AR—and all the functions that depend on AR—is running well comes down to how teams spend their time. Are they spending time on manual efforts, leaving processes open to error and limiting opportunity for analysis, or are they focused on high-value work, such as analyzing market trends and organizational growth? When AR processes are optimized, AR and its people are more connected to the rest of the F&A organization, and the entire enterprise benefits.              

Learn how you can Make the Move to Modern Accounts Receivable Automation.

About the Author


Molly Boyle