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4 Reasons Why Your ERP Alone is not Enough to Optimize your Invoice-to-Cash Cycle

Published on 4 min read

Your ERP is a jack of all trades, but is it enough to optimize your invoice-to-cash process? At first, you may think so. It would be the utopia as an ERP integrates and aligns all functional areas of your business (planning, purchasing, inventory, sales, marketing, finance and human resources). But as a jack of all trades that manages many moving parts of your business, does it mean it’s a master of none? Of course not, but traditionally ERPs are limited in managing your invoice-to-cash cycle. According to PayStream industry analysts,
ERP solutions are woefully inadequate in terms of receivables and collections management (RCM) functionality.
That’s a bold statement, but before you start getting down on your ERP, pause. It is one of the most important and vital business investments to set the foundation to optimize processes. What you have to keep in mind is just like any system that manages across functions, each ERP has its own advantages. But traditionally, the finance and accounts receivable capabilities in an ERP is limited with baseline functionality. Why? Historically customers have demanded that ERPs optimize resources for inventory and sales, while unfortunately overlooking one of the most important assets, the money they are owed...accounts receivable. So, is your ERP enough to manage your invoice-to-cash cycle? See below the 4 reasons why you may want to consider extending its capabilities to prepare for the future of AR: #1. Shortage of automation: How much time is your accounts receivable department wasting, manually applying and reconciling cash to your ERP? The traditional invoice-to-cash process is riddled with manual tasks that burden your team, making it difficult to close month-end financials. Dealing with unapplied cash and open items distracts your team from resolving disputes and following up on outstanding accounts, which can impact customer satisfaction. Accounts receivable platforms like VersaPay ARC, automate cash application and reconciliation by ingesting payment remittance information from both online (EFT/ACH, credit card) and offline sources (lockbox, checks, etc). It centralizes all payments to close open items in your ERP. By eliminating manual application, not only does it save time and money, but reduces human error in your process. #2. Lack of customer collaboration: Hearing crickets after your invoice has been sent? With traditional invoice methods (mail or email), there is no visibility on whether the invoice was delivered - did it land in their mailbox or skip spam? By pairing your ERP with an accounts receivable automation solution, you can present your invoices online to gain visibility into when it was ‘delivered’, who viewed it, and how many times it was opened. This is crucial for your accounts receivable team to see if invoices weren’t delivered and why. But the true value is the ability customers have to collaborate with your team in real-time for invoice disputes and resolutions. If your customer has been invoiced incorrectly or has an inquiry about a line item, they can open a dispute online which will notify your team directly. No more back and forth emails or phone calls - customers can interact with you online. #3. Limited visibility into invoice-to-cash: Do you know your top 10 outstanding accounts and how much money is sitting in your aging buckets (30, 60, 90+)? While ERPs have the ability to generate many reports, visibility is limited for your invoice-to-cash cycle. With a solution that specializes in accounts receivable, all data (customer, payment, invoice) is centralized to provide end-to-end visibility. Insight can be as micro or macro as you need. For example, you can drill down into a micro view of a specific customer account to view open disputes, invoices within specific aging receivable buckets and payment trends, or gain a macro view of the same insight for all accounts. #4. Shortfall in customer experience with no self-service portal: Your ERP is great for your team but has no interaction with your customer. Customers are demanding self-service to manage their accounts when they want, how they want. This helps them streamline their own processes. Without an accounts receivable platform to complement your ERP, your customers will lack a self-service portal to view and pay invoices online (EFT/ACH, credit card, etc) and interact with your team directly for invoice disputes or inquiries. By investing in a complementary AR platform, you are future-proofing your process to meet customer demands for e-invoicing and online payment, improving the customer experience. To optimize your invoice-to-cash efficiency, you should consider leveraging the value of your ERP with accounts receivable automation platform to cover these 4 areas. When evaluating platforms, be sure to explore solutions that have strong integration into your ERP. VersaPay integrates with leading ERP systems like Microsoft Dynamics, Oracle JD Edwards, Sage, and numerous others allowing you to extend the capabilities of your existing investment and get the most out of your ERP, accounts receivable process and team. You can learn more about our integration here. If you’re interested in seeing how your ERP and VersaPay ARC are better together, click here to book a demo and see this duo in action!

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