Eliminating The Challenges In Accounts Receivable Management

The Accounts Receivable function, for any organization, is well placed to strengthen its cash flow, improve its working capital and even contribute significantly to customer satisfaction.

However, efficiently managing their Accounts Receivable Process for any organization is a tedious process and it’s making them rethink their AR in a strategic way with the goal to shorten the entire invoice-to-cash cycle, reduce costs, improve process visibility and release additional liquidity.

Currently, the AR teams keep themselves extremely busy with several activities that include, credit management, invoicing, tracking aging reports & payments, sending reminders, dispute resolution, maintaining accurate customer master data, cash application, payment collection, payment reconciliation etc. etc.

All these tasks are highly repetitive and rely on outdated paper-based processes and manual interventions that could lead to delays in payments, increase in costs, errors that lead to disputes, and limited process visibility that don’t give the complete picture.

Accounts Receivable Automation Software helps organizations automate much of the above mentioned repetitive, tedious, manual tasks to streamline the organization’s financial transactions with its customers and, most importantly, speed up the credit-to-cash cycle.

CHALLENGES INHIBITING AN ORGANIZATION’S COLLECTION PROCESS:

According to a study done among 100 finance leaders, some of the biggest challenges they face while managing their AR function are:

HOW AR AUTOMATION HELPS ADDRESS CHALLENGES IN AR MANAGEMENT:

INCONSISTENT MANUAL PROCESSES:

Organizations that rely heavily on manual AR processes are unable to standardize their collections outreach and that could result in AR teams missing certain important milestones that are essential for following up on outstanding invoices.

Manual processes do not have a system that can track the status of customer payments, and moreover, without clear visibility, AR teams can unknowingly double their efforts and waste valuable time.

HOW AR AUTOMATION ADDRESSES THIS CHALLENGE:

With Automated Payment Reminders, Prioritized Collection Activities, Real-time Invoice Tracking, and Instant Access to a Robust Back-up Communication, AR Automation Software takes care of the ad-hoc manual processes and gives organizations a better chance at collecting payments quickly.

ACCESSING, COMPILING, & TRACKING INFORMATION ACROSS SILOED LEGACY SYSTEMS:

With different teams working in silos, AR teams find it difficult to access, compile and track information that is spread across multiple spreadsheets, reports and software tools. They spend a lot of time gathering information instead of servicing customers and collecting payments. And all this makes collections difficult to track.

HOW AR AUTOMATION ADDRESSES THIS CHALLENGE:

AR Automation Software drives efficiency by consolidating all important information, such as account statuses and payment histories in one place. This, coupled with integration for popular ERP software, enables the various systems involved to talk to each another and provide easier, real-time, instant access to information.

MINIMAL VISIBILITY INTO THE STATUS OF OPEN RECEIVABLES:

Probably the most critical issues that result from lack of visibility into the status of account receivables is misalignment, miscommunication and misunderstanding that eventually results into disputes, delayed payments and sometimes, even bad debt.

And this miscommunication or misunderstanding during the entire invoice-to-cash cycle, in fact, has a tremendous impact on any organization like loss of future business because organizations lack a streamlined way of collaborating with their customers as far as communication is concerned.

HOW AR AUTOMATION ADDRESSES THIS CHALLENGE:

With AR Automation Software offering 360O comprehensive visibility into the status of accounts receivables and making every customer communication easily & readily accessible, AR teams are in a better position to collaborate with, both internal teams and customers, to handle disputes effectively.

ERROR-PRONE, TIME-CONSUMING MANUAL PROCESSES RESULTING INTO SLUGGISH PAYMENTS:

Manual processes of AR Management make it extremely difficult for your organization’s AR teams to follow-up on overdue invoices promptly because organizations lack a centralized system that helps AR teams see which customers need to be reminded about upcoming payments and at what time.

Getting paid quickly via manual AR processes implies that organizations have rely on dunning letters and other disjointed customer outreach efforts (phone, email etc.) which are difficult to scale when the list of open receivables is huge. Most organizations try to solve this problem by increasing headcount or undergoing a significant team restructuring. Both of these solutions aren’t sustainable in the long run.

HOW AR AUTOMATION ADDRESSES THIS CHALLENGE:

AR Automation Software offers tools that deliver timely notifications and prompts that help AR teams focus on collections priorities. The software connects customers and your internal teams in a shared, online portal that facilitates real-time engagement and discussion on invoices that result in more timely payments.

FINANCIAL LOSSES RESULTING FROM DATA ENTRY ERRORS & MISTAKES ON INVOICES:

When AR teams send out lots of invoices on a daily basis, the highly manual invoice-to-cash processes result in many mistakes on invoices. Mistakes, such as, inputting incorrect amounts, using wrong invoice numbers, omitting discounts and excluding policies get compounded when organizations deal with large customers. This results in delayed payments as it takes time to respond to customers’ requests for clarification and apply revisions.

MISAPPLICATION OF PAYMENTS RESULTING IN NON-EXISTENT CASH IN THE SYSTEM:

The risk of misapplication of payments is much higher when the AR management process is highly manual. Moreover, posting a payment to the wrong invoice implies that AR teams have to spend a lot more time doing account reconciliation that can have a serious impact on your customers’ credit availability with your organization.

Until an incoming payment has been formally recorded in the accounting system, the existing cash in the system can be considered as non-existent. Plus, highly manual cash application processes imply updating journal entries that involve unnecessary flipping between multiple spreadsheets and ERP. All these introduce numerous opportunities for data entry errors.

HOW AR AUTOMATION ADDRESSES THIS CHALLENGE:

AR Automation Software offers tools that support integrated payments reduce errors from manual data entry by populating payments in your ERP automatically.

It’s time that organizations start to think strategically about their AR function and deploy tools & the processes that empower them to keep a healthy cash flow. Inebura from TanServ Business Solutions, is one such SaaS platform that effectively manages your organizations entire AR Management Process and Fast Forwards Revenue to Cash. It provides real-time, instant visibility into the status of your entire AR. It’s interactive, analytical dashboards enable AR teams make strategic financial decisions based on accurate information on the right KPIs, like DSO, Aging Reports, Cash Flow Reports, and more.