Accounts receivable in the age of automation: steps to success

Every Accounts Receivable (A/R) team will eventually hit an efficiency plateau and no longer scale effectively. When this happens, no amount of FTEs, contractors, or overtime can help overcome the impending tidal wave of the workload associated with processing and collecting payments. When you add in the recent pandemic-related market disruptions, it’s no surprise that CFOs have a renewed interest in securing working capital and uncovering ways to strengthen A/R liquidity management.


Enter A/R automation

According to Hackett Group’s 2022 Finance Insights Report optimizing working capital and financing digital transformation are in the top ten priorities for finance leaders in 2022. But what’s the smartest way for enterprises to go about this? For many years this sort of digital transformation has been thought of as an Accounts Payable or Procurement-only effort. No longer: for back-office automation to be most effective between buyers and sellers, there must be a collaborative balance of automation between AP and A/R organizations

Automating collaborative Accounts Receivable activities like data entry and management, outbound invoicing, managing discounts, and collecting payments benefit both sellers and buyers. The rewards to your A/R team are improved data accuracy, which reduces the chances of errors leading to late payments, and processing speed – so your team can turn their focus to improving cash flow. On the buyers’ side, A/R automation shortens turnaround times and supports digital transparency. It creates stronger digital ties and establishes a more proactive and collaborative relationship.

Whether your organization is jumping in with both feet or just testing the automation waters, here are some best practices to ensure ROI on your A/R digital transformation journey.


1. Understand what you’re transforming

Take the time to document your workflows. Catalog the specific stakeholders and efforts that revolve around those processes with an unbiased view into how your accounts receivable processes are running. Be honest with yourself and your team. In doing so, you will gain actionable insights and uncover weak areas. If you’re looking for a solid framework to start from, the folks over at Creately developed a 12-step process that will put you on track for success.


2. Get feedback from everyone

Remember, this isn’t a finger-pointing exercise, it’s an opportunity to bring in a broader perspective in order to validate your findings. Involving people outside your team allows for unbiased observation. Sometimes you can be too close to a project. Independent or adjacent stakeholders may uncover a required third-party validation on a particular process that slows the processing time down on 20% of your invoices, causing a more significant team backlog. If you don’t understand why these processes are in place and where the bottlenecks occur, you can’t even begin to map out how to fix them.


3. Map everything

Now that you’ve documented your processes and gotten feedback from your team and folks outside your team, map the process visually so you have a plan to return to. Everyone has their way of doing it—Visio, Lucidchart, Creately— whatever your process documentation tool of choice is, lean into it. Put everything down: What happens and why? Who’s responsible? What are the steps and processes? What is the input/output of each step? It might be a lot to unpack, but in the end, the more detailed you are, the more opportunities you’ll discover for transformation.

If you manage your logic-based steps manually, you’re wasting valuable time and money on something that could be automated. In the time it takes a single stakeholder to open, review, approve or deny, forward, or check against policy documentation, an automation solution can process THOUSANDS of documents.


4. Automate

Now that you have highlighted all the time-consuming steps in your workflows costing you efficiency and effectiveness, it’s time to find an automation solution that will address each one. Ask yourself these questions when assessing your potential vendors:


  1. Do they have a proven automation engine that connects seamlessly with your technology?
  2. Are they agile enough to be able to make the updates you need when you need them?
  3. Do they have a solution that speaks to every part of your transaction – seller and buyer?
  4. Are they relying on stale and outdated legacy architecture or fresh, innovative ideas that will grow with your business?
  5. Are they putting your best interests at the front of the conversation, or are they just looking for another label in their client base?

This is about you and your organizational needs. Make sure you scrutinize the capabilities and successes of your automation candidates.


Wrapping up

When used effectively, transaction automation has the potential to give your team back the time and space they need to do their best work. The right solution has the power to reduce operational costs, simplify mundane or step-laden processes, and streamline global compliance and clearance processes. Get started today and let A/R automation kickstart your entire organization’s strategic journey towards broader digital transformation and next-generation finance initiatives.

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