Risks Of Delinquency Through Manual Accounts Receivable


Accounts receivable (AR) is the financial debt owed to an organization for goods or services supplied or to be supplied. The process of collecting what is owed is known as accounts receivable collection. Commonly, AR collections are used as accounts receivable management tools. Companies traditionally employ manual accounts receivable collection processes, relying on spreadsheets or similar tools. However, the manual process of accounts receivable collections has certain risks and inefficiencies associated with it.

The potential of missing payments is one of the most dominant risks when manually managing accounts receivable collection. This can include manual errors, or omissions that are inherent within the manual process. Additionally, when the task of AR collection is left to human operators manually entering data into spreadsheet, it can mean extended timelines for acknowledging receivables, payment processing, and invoices generation. This inefficiency can also result in reduced cycle time, as well as missed payment opportunities, leading to increased delinquency within the accounts receivable collection.

By utilizing order-to-cash software for accounts receivable collection, businesses can mitigate the risks associated with manual AR. An order-to-cash solution automates range of processes, such as billing, forecasting, payment processing, customer-price negotiation, vendor-managed inventory, invoicing, shipping, customer relationship management, and more. Moreover, it increases the accuracy of data by ensuring consistency across the enterprise and increasing visibility across multiple customer invoices.

With the automation of routine tasks, accounts receivable collection utilizing order-to-cash software also helps financial executives in detecting and mitigating any potential discrepancies with customers. This prevents errors caused by manual manipulation of data or manual handling of customer invoices. As this generates greater accuracy and compliance in records, businesses can improve their credit history by timely payments and ultimately enhance their financial performance.

Finally, using an order-to-cash software solution takes away the hassle of manual accounts receivable collection, allowing financial executives more time to focus on strategy. Automation makes customer data storage, customer payments, invoice reconciliation, and any document-sharing easier, creating positive customer experience. This enables businesses to save time, customer interaction and overall customer relationship.

In conclusion, manually managing accounts receivable collection processes has multiple associated risks and inefficiencies. Utilizing order-to-cash software for automated accounts receivable collection can help financial executives detect and mitigate any potential discrepancies, increase accuracy and compliance, and ultimately save time and enhance the customer experience.