This guest post was contributed by Ernie Humphrey, CTP, Treasury Webinars & Rachele Collins, Ph.D. APQC.
An often-ignored benefit of modernizing accounts receivables (AR) processes via automation is the opportunity to engage customers in a way that directly benefits the bottom line. Happy customers pay more quickly, they pay it all, and they are receptive to suggestions on how they pay you. AR excellence is driven by the relationships that your AR team has with your customers, and those relationships are inherently more positive with automation support.
Typical pain points related to key areas of AR processing include the following:
- Presentment—Inefficient invoice exchange
- Collaboration—Misalignment on invoice terms, ineligible discounts taken, and communication barriers
- Collections—Lack of relationship visibility (into payments history, issues, and dispute resolutions), information asymmetry, and manual tasks and notifications
- Payments—Delinquent payments and checks (which cost more)
- Cash Application—Inaccurate or incomplete remittance information
Interactions with customers relative to mitigating any of these pain points matter. The good news is that technology can directly help address these challenges. For example, customer relationship management systems can reveal what customer interactions occur across departments, central customer portals can allow organizations to coordinate dispute responses, and automated data capture of all customer interactions can provide visibility for managing communications standards. Finance leaders would do well to meet with every employee that interacts with customers to better understand process pain points and determine what process improvements and automation investments can help.
The electronic exchange of invoices, remittance information and portals where customers can view open invoices, payment activity, manage payments, and communicate effectively with suppliers mitigate disputes, the time spent on disputes and cash application, and facilitate relationships that allow companies to take more control of how and when payments are made by customers.
The following metrics can be leveraged to monitor and manage customer relationship success relative to accounts receivable to help determine where to focus resources to impact accounts receivable success:
- Late payments monthly trends
- Deductions monthly trends
- Top 10 reason codes for late payments
- Top 10 reason codes for deductions
- Average number of days to resolve a deduction
- Average days to resolve a delinquent payment
- Top 10 delinquent customers
At the heart of accounts receivable success is effective and efficient communication with customers. AR automation mitigates barriers to effective collaboration with customers, and as such, positively impacts customer relationships. It is time for companies to recognize and manage the impact that the accounts receivable function has on customer relationships.
If you want to learn more about how accounts receivable automation impacts the bottom line I invite you to experience the webinar recording for the recent webinar AR Modernizing to Impact the Bottom Line: Automation, Analytics, Customer Engagement.