How Organizations Can Look to Accounts Receivable Risk Solutions to Reduce Delinquencies

Cash flow is the lifeblood of any organization; maintaining wholesome accounts receivable (AR) is a paramount task. This is especially true when running order to cash processes with multiple vendors, customers, and stakeholders on a daily basis. Each cog in this wheel needs to be addressed proactively and precisely to ensure maximum efficiency and to minimize risk.

AR risk solutions serve to provide visibility at all levels and to present an organized, streamlined system for managing accounts receivable. With the onslaught of Industry 4.0, most companies are transitioning to innovative, cloud-based solutions that can also be integrated with existing systems to efficiently assess and manage risk profiles.

A well-managed AR process should start at the point of entry, with purchase orders and invoices. Here, organizations can obtain a comprehensive view of current remittances and assess their overall portfolio. A combination of ERP and cloud-based technology should allow real-time insights into risk patterns and potential delinquencies, keeping account managers up to date with changes in the market.

To ensure maximum efficiency, organizations must leverage automated tools to manage risk policies. Automating these processes can significantly reduce the time it takes to verify transactions and process payments. This in turn leaves more time for analyzing risk profiles and making informed decisions.

Organizations can also utilize hedging to minimize risk. Hedging is an investment strategy designed to reduce the effects of short-term volatility. Companies can use this to protect the value of their receivables and guard against these swings in cash flows.

Another effective risk management strategy is to license third-party data that can be used to identify customers/vendors. This allows organizations to efficiently vet checks and assess risk. Leveraging independent companies to validate creditworthiness will provide additional security for any AR process and minimize the risk of default or delinquency on payments.

Using accounts receivable risk solutions will help organizations navigate the complexity of managing payables and receivables. Establishing a reliable, data-driven structure for incorporating and analyzing market developments is key to a successful AR process. This will help organizations streamline the entire order to cash cycle, reduce friction in the vendor/customer relationship and minimize the chance of non-payments.