Over the last 18 months, businesses have had to accelerate their digital transformation journeys to alter the way they operate, manage costs and handle business operations in order to overcome an influx of market headwinds.
Businesses hampered by manual accounting systems are likely to see cash flow negatively impacted, limiting growth and the agility of the organisation overall. To combat this, many businesses are looking to automate the accounts receivable (AR) process.
“AR automation is there to drive business value for organisations,” says Brian Morgan, director of product marketing AR at Blackline.
“The value is around the acceleration and generation of cash being released from debtors, so it’s vital that AR automation is embedded within a business to speed up the operating processes,” he says.
The current business landscape
Generating cash has been impacted significantly by the Covid-19 pandemic. Over the last few years, the landscape was adequate; interest rates were low, and business was generally good.
However, since the outbreak in March 2020, several businesses have recognised the importance of having a robust AR infrastructure as cashflow management has become even more critical, even for those who witnessed an increase in sales.
Automation and streamlining the accounts receivable process proved to be vital, allowing businesses to gain greater visibility of their cash flow and working capital, as well as ensuring that invoices were paid on time and automating the entire process of accounts receivable.
This also allowed businesses to understand their overall liquidity status and gain control over their working capital to help settle debts, pay expenses, repay investors and re-invest in the business where it is most necessary.
“Utilising accounting platforms that can streamline the entire end-to-end financial close process is key to survival,” adds Morgan.
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Releasing the back-office mentality
Businesses have needed to capitalise on every opportunity which can free up their working capital.
“Many organisations invested in the front end of the sales process, but not the back. For those organisations investing in AR Automation they are realising significant value in by collecting cash faster and improving customer engagement,” says Morgan.
Releasing the back office mentality can allow businesses to excel with commercial acumen and optimise in key areas which can fuel growth. “The debt that the Accounts Receivable team are collecting is the outcome of sales to customers. Therefore, both the strategic and operational importance of this is significant and is now being seen by many organisations,” Morgan adds.
“For example, customer experience can be impacted, positively and negatively, by how the AR team engages with customers,” he says. “Perhaps more importantly is the realisation that AR departments have access to vast wealth of data and intelligence of customer behaviours that the Commercial team would greatly benefit from gaining access to.”
Raising the bar on automation
Effective cash management is also vital for success. Amidst all the uncertainty, it has become paramount with AP and AR professionals coming under immense pressure, Morgan explains.
“We’re in this cycle where we now have to pivot between the need to buy and sell,” he says. “To sell comes at a risk as businesses might not get paid, or they might not generate any profits or cash. But then they need to collect the cash to fund the working capital and to generate the next set of sales – that’s currently the real business landscape for organisations.”
So what can be done to combat the issue? From an AR and automation perspective, businesses need two things: time and data.
“Time, because it allows businesses to perform actions, which then drive the results. Data, because it’s imperative to make decisions that drive these results,” says Morgan. “The two go hand in hand, and although they work in isolation, this is where AR management can really provide value to customers.”
Businesses also need to steer away from handling manual processes to focus on driving engagement and improving customer relationships which will ultimately drive growth.
Morgan notes too many organisations are performing processes which are manual and can be automated. “This will allow AR professionals to have more time to deal with the accounts, such as contacting customers and building important relationships – this will impact the results,” he says.
Utilising data to make strategic business forecasts
Understanding the behaviours within the data is imperative for businesses to make strategic business forecasts and gain a consistent view across the whole business.
Each business has their own data lake and processes, however, trying to handle this process manually can be both difficult and costly. One of the reasons is because enterprise resource planning (ERP) solutions are typically difficult to mine data from, according to Morgan.
“Many businesses have all the data within their business, but they’re unaware of how to get access to it. It can be difficult and costly,” he says. “Embedding a data-driven and unified platform can take this challenge away and respond directly to the difficulties faced within a business.”
AR automation and data predictions also give time back to employees who can focus on driving actions that drive real results, while automation optimises performance and takes care of the debtor’s aspect of the balance sheet.
And with businesses having to change their processes to meet adaptations in the market, accounts receivable platforms are perfectly placed to help companies provide real-time recommendations and help mitigate against any potential risks.
Race to digital transformation
Having a modern accounting suite of applications can boost transformative success and help businesses get ahead of their digital transformation.
Working with an AR unified platform can also help businesses maximise their working capital and unify all payment processes into one suite of applications. This will allow businesses to gain a better overview of the company’s overall liquidity and credit and help eliminate manual work and reduce process errors.
“Whether in treasury or sales, teams all throughout the business are making hundreds of decisions every day. With decision intelligence at the fingertips of users, the AR process will make it easier to make better decisions,” adds Morgan.
“AR is a value enabler to the core purposes of the business around revenue, profitability and cash. There are so many moving parts to a business, but this offers one unified solution.”