3 Accounts Receivable Essentials Controllers in Manufacturing Need to Perform With Precision

Whether they’re creating financial statements, ensuring a clean financial close, or maintaining books that hold up under audit, accuracy and precision are essential for any financial controller. 

To meet those objectives, controllers and other finance leaders in manufacturing environments—directors, VPs of finance, and CFOs—need data and workflows they can trust. Yet many manufacturers are still working with manual accounts receivable (AR) processes. Fragmented systems, disputed invoices, and misapplied payments are standard. 

In that environment, controllers can’t be secure in the reliability, accuracy, and precision of the processes they manage. But AR automation can help put the pieces in place that will ease their minds and start building a more reliable landscape for finance teams. 

Your controller and other finance leaders are responsible for the financial accountability of your business. Working at the nexus of financial and operational decision-making, it’s their job to care about the return on investment (ROI) of every operational decision and evaluate every opportunity for its ability to reduce risk and improve cash flow. 

To perform effectively, they need an accounts receivable environment that supports their goals. That begins with this list of must-haves: 

According to a survey by EY, 91% of industrial financial controllers see data analysis as the most critical area of their job. Yet, a survey from the Manufacturing Leadership Council shows that 70% of manufacturers are still collecting data manually. This creates a disconnect, where accurate data is critical, but difficult to achieve in real time.

In accounts receivable, reliable data is the backbone of accurate financial reporting and compliance, and necessary for precise forecasting. But when your cash flow system isn’t connected from end-to-end—incorporating payments and invoice data, collections and customer behavior trends—that reliability is difficult to achieve, impeding the invoice-to-cash cycle.  

A lack of end-to-end data integration makes it difficult for finance teams to reconcile invoices that span multiple SKUs, change orders, partial shipments, and credits to build reliable records against which operational decisions can be made. They're left manually searching through a high volume of transactions and purchase orders for remittance advice and payment details—increasing the chance of inaccuracies.  

Unreliable data not only makes precise forecasting, reporting, and remittance difficult, but can also lead to friction that damages the customer experience. Common data errors like incorrect invoice amounts, missing information, and misapplied payments can lead to delayed payments and invoice disputes, slow down cash flow, and increase days sales outstanding (DSO).  

To ensure their reporting is precise, that cash is flowing into the business, and that they’re compliant with relevant laws and regulations, controllers need accessible real-time data they can trust. 

Real-time, accurate data syncing between accounts receivable automation, enterprise resource planning (ERP), and financial management systems centralizes data, creating a single source of truth. This enhances data compliance, reduces errors associated with re-inputting invoice and payment data across systems, and offers finance teams real-time, end-to-end visibility into cash flow, accelerating the invoice-to-cash cycle.

Across industries, ERP systems play a critical operational function, helping businesses manage inventory in real-time, automate procurement, plan production, and make strategic decisions. By integrating your payment acceptance or accounts receivable automation platform with your ERP, you ensure your collections data becomes part of that decision-making process, eliminating silos and increasing visibility into your entire operations. 

In manufacturing, having clear visibility into the invoice-to-cash cycle is especially critical. It allows you to speed up payment collection by making it possible to accept payments from any channel, and to improve the customer experience through personalization—both of which increase confidence in your cash flow. It's also key to achieving data accuracy, reducing the chance of manual data entry errors by automating data exchange. 

Our own data shows just how important ERP integrations are in manufacturing, with 58% of manufacturers saying they have digitized their ERP integration in their accounts receivable department—compared to 46% across all industries.

The right AR automation platform will connect natively with ERPs like NetSuite, Microsoft Dynamics 365 Business Central, and Sage Intacct (or through open API and flat files to all others) to integrate receivables data with the business-wide data environment. By connecting digital invoicing and payments, this will streamline accounts receivable processes and accelerate cash flow. It also reduces manual data entry, reconciles payments more quickly and with greater accuracy, and simplifies payment processing.

Quick and accurate payment reconciliation lets controllers identify unpaid customer invoices early, forecast reliably, identify errors, and complete an accurate financial close. It also speeds up cash flow by reducing the amount of time you spend matching a payment with an open invoice and reconciling bank transactions to post back to your ERP or ledger. 

Yet the complex invoicing environment in manufacturing makes reconciliation more complicated, with AR data living across spreadsheets, ERPs, and email threads. Manual processes create the potential for errors, duplicates, and reconciliation delays. They slow down financial close and make it harder to maintain an accurate audit trail. 

These challenges can be especially detrimental to finance teams managing high-transaction volumes in low-margin environments, where slow reconciliation can make it more difficult to manage working capital and identify cash shortfalls in time to pivot operational decisions accordingly. 

Yet many manufacturers don’t recognize the way their manual processes get in the way of precise reconciliation. Our data shows that only 21% see reconciliation as one of the top return on investments provided by AR automation. That number seems deceptively low when you consider the far-reaching benefits quick reconciliation can have—improving regulatory compliance for audits, enhancing forecasting accuracy, speeding up collections, reducing DSO, and enhancing customer transparency. Manufacturers continue to prioritize all of these, as evident in the image below.

Cash application software with optical character recognition (OCR) and payment matching capabilities enabled by artificial intelligence (AI) can speed up the cash application process and reduce the chance of errors, creating an up-to-date picture of outstanding receivables. The right automation platform can read both digital and paper transactions—including wire transfers, ACH, and checks—eliminating manual data entry and removing delays from matching payments and invoices, to give collectors real-time visibility into current cash flow. 

An online payment portal also allows payments to be automatically posted back to your ERP without manual intervention or investigation. Payments are made directly against invoices, or portions of invoices, and automatically reconciled—ensuring accuracy without slowing down cash flow.

Versapay’s AR automation solution, purpose-built for manufacturing, creates the environment that controllers and other finance leaders need to build accuracy and precision into their receivables function. Featuring automated reconciliation, connected data, ERP integrations, and improved workflows, it accelerates cash flow, improves visibility, and creates a single source of truth for accounts receivable.