By Jason O’Connor, VP of Marketing – UK & Ireland, Quadient
Last year presented unprecedented challenges for almost every industry, with many businesses left with no choice but to completely rethink their approaches to standard procedures. By adapting to the ‘new normal’, organisations and individuals across the country have started relying on technology more than ever before. Throughout this age of digital transformation, one thing has become clear – automating the Account Receivable (AR) process is a much more efficient, reliable and transparent solution to managing cash flow. As we start a new year, organisations should look to optimise this as a solid business investment.
Digitising Accounts Receivable
Effectively managing AR is essential for any business, as it ultimately determines when payments will be made and received. To ensure transactions are met, there is often a considerable amount of time spent chasing invoices or purchase orders. Today, we live in a world where there is a platform or software system available for almost every business requirement. A digital AR platform is a streamlined way to manage accounts as it manages distribution and gives insight to payment activity and other key information in one reliable place. While it remains a useful tool for businesses, customers also benefit, with easy access to documentation as and when they see fit, as well as the ability to make payments at the push of a button with little hassle.
The core benefits
With an AR platform in place, an organisation has the ability to administer all accounts processing at the push of a button. An intuitive digital system is key to success, especially for businesses spending a considerable amount of time manually managing AR. With a platform in place, businesses are provided with a steady and reliable process which can be filtered across different teams within the company, ensuring everybody follows the same procedure. A cloud-based solution also requires less manual data entry and enables individuals to prioritise driving sales and engaging with potential customers. With greater visibility to insight and data across accounts, users are presented with a smoother reporting process and a better chance of preventing any invoicing or administrative errors before they become an issue. In essence, an automated AR solution is a single digital record which significantly improves cash flow.
Positive cash flow
Efficiency is the biggest saver of time and money – and an AR platform does exactly that. By integrating with existing enterprise resource planning (ERP) and customer relationship management (CRM), AR platforms combine real-time analytics and payment predictions to significantly increase cash flow. Cash flow is paramount for all organisations as it determines important decision making and overall business growth. One way to ensure a steady cash flow is by reducing Days Sales Outstanding (DSO) – a measure
of the average number of days that it takes a company to collect payment after a sale has been made. Reduced DSO results in invoices being issued on time and containing digitally collated information. Efficient collection is another key element. By using the AR system insight to understand customer payment behaviours, the collections team can focus on late payers or payment risks. Reporting also helps the management team to track cashflow and identify issues that need resolving.
Making the switch
Although switching to a digital platform may seem like an obvious step, businesses may feel apprehensive about the transition. This could be for a variety of reasons, one being employee confidence towards fully understanding the process. While manual ways of working can be time-consuming and provide limited insights from data, employees may feel more comfortable with the current system and find the thought of switching to be overwhelming or daunting. Each employee will learn a new solution at a different speed, so it is important to address this by providing adequate training case-by-case. It is also essential that employees are fully taught not only about how the system will work, but also the benefits it will have on the company as a whole.
Businesses may also find it difficult to picture how a new solution will work when there is already an existing legacy system in place, with software such as ERP and CRM. However, an AR management platform works from a single data set and integrates ERP, CRM, accounting and billing systems to improve reporting and facilitate payment and collections. Despite the advanced technology, cloud-based solutions are often user-friendly and require little to no IT involvement.
As we delve into 2021, businesses across the country have a much better chance of strategically planning for the coming year compared to 2020. With the business landscape remaining unknown for the foreseeable future, now is an ideal time for organisations to invest in products and services that can help them thrive. There are many positive outcomes when it comes to utilising digital procedures – with AR platforms, there are less complications in the long-term, fewer additional costs and a significantly enhanced customer experience.