The Risks Of Not Using Automation For Accounts Receivable Credit Management


CFOs, financial executives, and anyone else responsible for accounts receivable (AR) credit management may be keenly aware of the challenges posed by manual processing. it ishould come as no surprise that automated tools can significantly reduce the amount of time and resources required for managing AR credit. Yet not every business utilizes software for AR credit management automation and so it pays to consider the eventual repercussions of this decision.

Firstly, manual processing of AR credit requires an excessive amount of human resources. role such as credit manager must be done by an in-house employee and such personnel costs contribute to the payout of salaries, benefits, and other related concerns. Furthermore, it necessitates the allocation of valuable time away from other essential duties, such as controlling risk, reporting to senior management, and developing customer relationships.

The delay caused by manual processing of AR credit can have serious effect on companies cash flow. This can happen for the following reasons: payments are not posted in time to accurately reflect the balance in the companies account for the current time period; invoices do not go out on schedule, thus resulting in late payments; and any disputes or queries cannot be handled as quickly as they could be with automation.

Because automation can be used to facilitate efficient data entry, update information quickly, and detect suspicious changes to credit limits, the accuracy of invoices sent out and the timeliness of payments received will be improved. Similarly, businesses can ensure that their accounts are kept up-to-date and that the portfolio of customers is properly managed.

Accounts receivable credit management automation software also makes it easier to share information with other departments, such as sales and customer accounts, to this helps to ensure that all teams are kept immediately informed of any updates. This helps to reduce any potential conflict between the various teams and ensures that, as whole, the best interests of the company are being met.

The potential for fraud, which is present whenever manual handling of AR is required, can also be significantly diminished by using appropriate software. In addition to accurately tracking customer data?including name, address, and bank information?AR automation software can also be used to monitor suspicious activity.

For all these reasons, it is clear that there are risks with not using software to support AR credit management. An automated system can help to streamline processes, thus helping to reduce the amount of time devoted to such tasks; minimize human errors; minimize the impact of fraud and similar concerns; and ensure that all related tasks are done quickly and accurately.