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Why You Should Implement AR Automation Before Changing ERPs

Published on 4 min read

This blog explores why implementing an AR automation solution ahead of an ERP change enables your business to immediately start reaping benefits such as:

  • Operational efficiency,
  • Per-payment processing cost-savings,
  • Team scalability,
  • Cash forecasting accuracy, and
  • Customer experience improvements.
Two accounts receivable professionals look at a computer monitor

One of the most common discussion topics with our customers is how they can most effectively manage the timing of an accounts receivable (AR) automation project when they know that their business will be changing, upgrading, or consolidating its enterprise resource planning (ERP) system.

Finance, treasury, and AR leaders are often surprised to learn that implementing an AR automation solution before changing their ERP can help make the switch easier on their business. In fact, this approach can alleviate one of a CFO’s most common concerns about an ERP change—the impact on revenue recognition.

Why automate your AR first?

Businesses care about three things: 1) having healthy cash flow, 2) being easy for customers to work with, and 3) empowering employees to work intelligently. Automating your AR first ensures these critical factors are buttoned up before taking on the complexity of an ERP change.

Your business can immediately start reaping benefits such as operational efficiency, per-payment processing cost-savings, team scalability, cash forecasting accuracy, and customer experience improvements.

Your IT resources are precious—use them wisely.

Implementing an AR automation solution like DadePay (since acquired by Versapay) prior to changing your ERP reduces the amount of work that IT must do come the actual transition. When a business does not have an AR automation solution in place and is still using a lockbox with keying, for example, a separate project is needed to deal with this when an ERP change is made.

A bit of IT time spent on an AR automation solution implementation beforehand saves time later.

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What does an AR Automation solution implementation entail?

When businesses implement AR automation solutions, the project typically has three primary components:

  1. Capturing incoming payments—the ways the solution will interface with lockboxes or bank reports and be enabled to capture any payments coming into office locations or from the field.
  2. Getting AR from the ERP and posting payments back to it—this ensures the ERP remains up to date and the central source of truth.
  3. Configuring the solution to reflect business rules—it’s key to make sure that the way the business validates payments is appropriately supported by the AR automation solution.

When a business makes changes to its ERP(s), only one of the above components needs to change. Versapay has helped many businesses successfully navigate upgrades or migrations (from Infor to SAP S4 Hana, SAP to Workday, and Workday to NetSuite, to name a few). These updates are low risk and easy.

The accounts receivable process itself typically does not change when ERP changes are made. Therefore, the benefit of having an AR automation solution in place beforehand is that the AR team does not require training on a new process: Versapay was used to apply cash on ERP System A and is still used to apply cash on ERP System B.

With this illustration, you can see how having an AR automation solution in place makes the transition to a new ERP easier. Additionally, payment history will live in the AR automation solution, making it easy for your team to research information throughout and after the ERP change.

What if the AR automation solution we implemented doesn’t work with our new ERP?

It’s important to choose a solution that is flexible to accommodate your business systems and banking relationships—however they may change in the future. Versapay interfaces with any ERP. When we encounter ERP systems we haven’t worked with previously, we take on the responsibility of creating the integration for future re-use with other customers.

Recommendations for successfully managing an AR automation project prior to an ERP change include:

  1. Implementing your AR automation solution now—Start reaping the benefits of faster, more accurate cash application, an improved customer payment experience, and reduced write-offs, collections, and DSO.
  2. Locking down your improved AR process and business rules—Allow your team time to be trained on the new solution.
  3. Making your ERP change/upgrade worry-free—AR, credit, and collections teams will already be performing their daily functions in the AR automation solution and can continue to do so without disruption to your operations or customer processes. Your business will also have payment history in the AR automation solution, enabling staff to research payments in one familiar system instead of two ERP systems (one completely new to them).

The bottom line

Implementing an AR automation solution ahead of an ERP change enables your business to immediately start reaping benefits such as operational efficiency, per-payment processing cost-savings, team scalability, cash forecasting accuracy, and customer experience improvements.

When your ERP migration does occur, the time involved with making changes to the interface between it and the AR automation solution is minimal and low risk. Additionally, your AR team will already be trained on their new AR process, ensuring continuity in what will be a time of significant change for the business otherwise.

Revenue—the lifeblood of your business—flows through accounts receivable. If you can go through an ERP migration without disturbing the process of applying cash and recognizing revenue, that’s a win for the C-Suite and AR.

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