The Risk Of Incomplete Accounts Receivable Automation


In this digital age of rapid technological advancements, businesses are turning to automated solutions to improve efficiency and profitability. Automated accounts receivable solutions are no exception a carefully tailored Order-to-Cash (O2C) solution can improve cost savings and visibility into the receivables process. Unfortunately, investing in tailored O2C solution and failing to automate the Accounts Receivable (AR) process in its entirety can put the business at risk of inefficient resource utilization and potential losses.

ARM automation encompasses numerous aspects, including billing and payment, credit management, and dispute management. Accounting teams are often overwhelmed by the large volume of tasks and information needed to manage receivables. By incorporating an automated platform, businesses can decrease manual effort and improve accuracy in managing accounts and tracking payment information. Automation can also help improve cash flow through faster resolution of disputes and quicker collection of payments.

The importance of complete AR automation goes beyond management of accounts. Without tailored solution, accounts can go unpaid for longer periods of time, resulting in companies being forced to rely on additional external financing that may come with significantly higher cost. By automating the system and gaining enhanced visibility into receivables, companies can better assess and anticipate cash flow trends, helping them invest and manage those resources more efficiently.

Research estimates that businesses that lack efficient management and visibility into their accounts receivable processes can lose up to 2% on the value of their receivables in each day they are overdue. Additionally, manual AR processes adversely increase costs, due to human errors, higher operational costs, and extended time spent in enabling accounts.

Efficiency and cost savings are further affected when items like rebates, credits, and returns are excluded from the automated process. These exceptions are often difficult to calculate, and require an immense amount of manual work and time. By omitting these exceptions from the automation process, the costs associated with them can be very high.

In summary, establishing complete automated AR process is key to realize the full benefits of tailored O2C process and maximize profits. Companies seeking to improve their cost effectiveness and cash flow should strive to adopt comprehensive automated system to achieve the greatest return on their investment.