It's clear that CFOs are under a lot of pressure. They certainly don’t want cumbersome manual accounts receivable processes to interfere with their responsibilities.
If you've been ever been involved in the accounts receivable process, it primarily depends on a multitude of spreadsheets or different invoicing tools to stay organized. And, you would have encountered several common challenges, such as:
- Investing significant amount of time in handling tedious, mundane tasks, like managing various spreadsheets and manually following up with customers.
- Minor inaccuracies, and sometimes, major, resulting from human mistakes, leading to invoices being sent to the wrong recipient, and this complicates the accounts payable department's ability to process payments promptly.
- The detrimental long-term effect that pursuing late or non-paying clients can have on fostering robust and successful customer relationships.
- The difficulty of settling payment conflicts when there is no clear ‘paper trail’ or established business processes.
These challenges or pain points can result into three outcomes: firstly it could result into a significant amount of time lost; secondly, it could lead to companies not receiving payments on time and potential bad debt; and thirdly it could have a detrimental effect on customer relations.
And if were to put a finger on who to blame for these pain points and outcomes, it would be inefficiency that comes from manual AR processes… and this is what keeps CFOs awake at night.
Looking back, finance teams were frequently thought of as a support function. Accounting was done in the background or concurrently with routine business operations. But, now, all this is changing. These days, finance teams have risen through the ranks and are important strategic partners in decision-making.
That being stated, it is imperative that every business's financial department has a strong basis in operations such as recording and transactions. Without establishing these basic layers, the finance team can't become more strategic. This should become their goal. To become an integral part of driving the business forward and influence other important business functions.
CFOs need to strive to be proactive and offer important insights into the company's cash flow, credit management, and other core areas that are their responsibility. For instance, by introducing innovative techniques for customer invoicing or contract billing, the finance team can assist the sales team in closing better deals and receiving payments more quickly.
In conclusion, good accounts receivable management cannot be achieved by taking quick cuts. Before finance teams can transition to strategic roles, you need to have a strong foundation and a robust fundamental procedure. Software for accounts receivable, such as Inebura, can expedite this process by handling time-consuming but fundamental accounting duties.
Ineffectiveness hinders CFOs' ability to do their duties in two ways:
1. Greater Visibility across AR processes
CFOs require instant, real-time access to crucial ‘financial health’ data to enable them to analyse who is making payments and who isn’t. Additionally, for customers who delay their payments, it’s important to identify the obstacles that are preventing timely transactions.
2. Making cash collection a priority to maintain strong customer relationships
Chief Financial Officers understand that customers who make timely payments are typically the most valuable clients overall—and it is their responsibility to nurture these favourable customer relationships over the long term.
Accounts receivable automation tools like Inebura can help CFOs address both of the above areas to help them streamline the AR processes. To know more or to book a demo, write to sandeep@inebura.com