Accounts receivable is not failing, but still needs more innovation
Just because you think something isn’t broken doesn’t mean it’s not. In fact, it may be costing your company millions of dollars annually while running smoothly.
When it comes to boosting efficiency, as well as cash flow, business executives have typically overlooked accounts receivable (AR). While upending a tried-and-true process such as AR may be daunting. After all, if you’re getting paid then the process is at least functioning — the long-term benefits far outweigh the risks. Especially when tried and true is also slow and manual.
From predictable cash flow that can be used to invest in innovation, to increasing efficiency within AR departments, here’s how thinking strategically about AR can position your business for success.
Business is often characterized as a balancing act — and for good reason. Rather than making decisions only with regards to immediate impact, financial executives must carefully gauge what the consequences will look like a year, and five years, down the road. Strategic planning around AR can help achieve just that.
Since AR processes directly impact cash flow, its efficiency plays an important part in both the short- and long-term success of the business. Executives should consider reviewing their AR department for any process inefficiencies. Introspection of that nature can be tough, but it’s a crucial first step.
And while plenty of emphasis is placed on increasing efficiency, strategic planning also involves correcting or replacing outdated processes that are ineffective. In some cases, a formal process might not even be in place; other times, a long-standing process, like print invoicing or manual cash application data entry, may no longer be necessary. By demonstrating the willingness to get rid of established, yet inefficient processes, organizations increase both the speed and effectiveness of their AR teams.
Having come a long way in a short time, AR technology is positioned to replace the manual processes organizations have relied upon for far too long. Customers already demand more speed and flexibility when managing and paying their own invoices, and using new technology to meet these changing demands provides a competitive edge.
Automated AR solutions must integrate seamlessly with existing enterprise resource planning, or ERP, systems. This simple step enhances the invoice-to-cash process by eliminating a significant amount of the manual data entry and by providing accurate, reliable updates in the ERP. In addition, this frees up credit managers and their teams to focus on other tasks, like tracking down collections.
Often overlooked by financial executives, automating your AR processes is one of the simplest ways you can reclaim operational costs, improve efficiency and accelerate cash flow. The technology is out there. The willingness to implement it frees finance teams to be more strategic and focus on high-value projects, not manual processes. By automating this dependable, but ultimately inefficient process, organizations can pave the way for accelerated cash flow and set the stage to advance innovative, growth-oriented ideas.