Harnessing A Solution For Streamlining The Accounts Receivable Management Process
Accounts Receivable Management Process
When it comes to the accounts receivable (AR) process, business and other organizations need efficient strategies to maximize their receipts and minimize their losses. Traditionally, companies had to rely mostly on manual processes such as manual data entry and manual customer outreach. This approach, while sometimes necessary, can be time-consuming, laborious and open to human errors that can prove costly over time. An order to cash (OTC) software can serve as sensible solution for organizations striving to simplify their AR management process. That said the primary focus of this article will be to provide step-by-step guide for executives in finance departments for using an OTC solution to facilitate their AR management processing.
To begin, organizations should compose and articulate comprehensive plan for their OTC process that involves mapping out the specific objectives, milestones and timeline for implementing the software. This plan should include creating customer-centric approach with system that synthesizes the tracking and tracing of outbound invoices from the system, validating customersupplied customer data, and reconciling the data between the AR software and the host ERP system. In addition, organizations should strive to decide upon and implement holistic OTC strategy, including putting into place system for actively monitoring areas of risk and taking preventive steps to reduce those risks.
Once the organization has established the necessary parameters of their OTC system they should move on to the implementation and training process. When working out the implementation, they should consider the budget, adopt user-friendly platform, prioritize deployment objectives, and configure OTC settings. Furthermore, organizations should leverage any available training programs to ensure that their staff is well-versed on the OTC software to ensure that its accurate usage. Organizations should ensure that their staff are comfortable using the system, early users are closely monitored, and that typical user issues are addressed promptly. Then the organization is ready to begin its OTC process.
The first step in this OTC process is to launch the AR Softwaresystem. Executives should then define roles and responsibilities of staff members, monitor system performance to ensure performance criteria is being met, run an electronic audit of customer accounts, and ensure that billing rates are accurate. Then organizations should send invoices to customers automatically and reconcile the payments.
Throughout this entire process, executives should pay special attention to OTC-related risks, including customer-base erosion, rework rate, unanticipated foreign exchange risk, and issues associated with services and payments. Executives must also be aware of their credit terms and formal terms used in the OTC process, such as bill of lading, letter of credit, or payment in advance.
Finally, organizations should consider setting goals for their accounts receivable management process. Goals can include increasing the number of customers paying within terms, decreasing overdue debt, maximizing the time invested in billing, and automating collection processes. This can be achieved by leveraging an AR Softwaresystem to analyze characteristics of outstanding debt, evaluate payment history records, and categorize payment priorities.
In conclusion, harnessing an OTC software provides organizations with substantial return on their investment, as it facilitates greater simplicity, improved visibility and transparency, and streamlined processes. An effective OTC system will also minimize the chances of risk and accelerate cash flow. Executives in finance departments can use the guide provided above to streamline their AR management process with an automated OTC solution.
