Advanced technologies, including robotic process automation (RPA), will forever change accounts receivable, collections, and deduction management.
Like most other back-office functions, receivables management was a manual affair as recently as twenty or thirty years ago, working off printed agings, typing reconciliations and letters and mailing or faxing. It’s hard to believe that tools MS Excel, word processing, etc. as well as the internet and email (then called “electronic mail”) were not generally available until the1990s, even in the most rudimentary forms.
Improvement of the receivables management function will not only bring down administrative (personnel) costs but importantly to manage cash flow and protect the company’s profits. It has not received a lot of attention up to now because there is generally not a lot of staff involved. For many companies, accounts receivable represent “low hanging fruit” for improvement at this point.
Today, with robotics process automation and artificial intelligence, the job of managing credit, receivables, collections, and deduction management can be incorporated into a holistic, integrated setup that manages the process from customer onboarding to payment. System workflow manages the accounts receivable operation from beginning to pay.
AR is a transformative opportunity for a relatively small investment to drive performance in one of the largest asset classes. Managing inventory turns gets a lot of attention and management time, and it should. Receivables deserve no less attention.
Consider that a $1 Billion(revenues) company may have $125 million of receivables, of which $10 million may be over 90 days and at risk, and there may also be many millions of disputes and customer deductions on top of that.
AR automation also improves the customer experience, eliminating or streamlining trading partner paperwork and reconciliation or orders-shipments-payments. Large buyers (say Wal-Mart, for example) are mandating automation, as increasingly necessary in competitive pricing environments.
For the manufacturer, a tightly integrated billing to payment process will assure a healthy cash flow and an increase in profits due to the elimination of the “revenue leakage” that results from collecting less than you billed.
We are affiliated with the Smyyth companies. The Smyyth Carixa™ Cloud Platform is an example of the type of advanced solution that can transform accounts receivable operations. Automated credit applications, system controlled collection reminder emails with customer-friendly credit card and echeck payment options built right in, computerized communications, instant deduction reconciliation, to 100% automated cash application. Using robotic process automation, even accessing customer systems, is automatic, for documentation, reconciliation, cash forecasting, etc. The software replicates (and automates) our decades of experience and best industry practices to deliver an outstanding, friction-free customer experience.
The technology to optimize credit to cash billing to payment processes is here and will continue to improve using AI and RPA. More companies need to recognize how much more successful they could be by automating these backroom operations.
“Companies can add a few points to their profits with a laser focus on managing what is often their most significant asset -accounts receivable “