The Unaddressed Risk Of Relying On Manual Accounts Receivable Management
AUTOMATED ACCOUNTS RECEIVABLE MANAGEMENT
For many businesses, adopting automation software to streamline their accounts receivable (AR) management is critical component of their overall operational success. However, choosing to delay this adoption and opting to instead rely on manual accounts receivable process puts any company at colossal risk. Such choice threatens to impede the organizations hard-fought efforts to be profitable, cost-effective, and efficient.
One of the main issues to consider is when relying on manual AR processes, errors are inevitable and these errors become more complex overtime. As manual AR processes employ multiple people in order to keep up with individual transactions, the scarcity of staff and the amount of time to process multiple transactions make these errors more likely to occur. Such errors can include missed invoices, unrecorded payments, incorrect billing amounts, or any other miscalculation. If handful of errors can creep into the process unnoticed, it can lead to backlog of time-consuming and inaccurate books. In some cases, companies may even miss deadlines to pay suppliers, resulting in late payment fees or other sanctions.
Furthermore, manual AR processes can hinder the companies ability to accurately predict cash flow. Without the help from timely and effective automated software, the use of manually-based process means the organization will have to go through gruelling, time-consuming process to assess the records for any upcoming cost, billing or future expenses. On top of that, manual processes do not offer any automated insights into the financial health of the business, severely impacting the organizations ability to forecast any upcoming expenses or opportunities.
To streamline accounts receivable processes and reduce the risk of errors requires an automated AR process, with corresponding Order-to-Cash (OTC) software. An automated AR process and OTC software offers several advantages, enabling businesses to provide customers with accurate invoices, collect payments, and manage taxes easier, while also creating consolidated platform to display comprehensive financial data. This can be especially useful when multiple entities are managing individual accounts.
Additionally, using OTC platform helps companies to quickly respond to billing or payment requests from customers, generating additional revenue. Automated AR systems help improve the timeliness of communication and reduce discrepancies between accounts. They also provide an automated platform for cash inboxing an activity for automatically ingesting unstructured accounts receivable data from email, fax, or another source, whilst automating common tasks such as the entering of data in accounts receivables ledgers. Larger organizations, in particular, benefit from their ability to automate selection and reconciliation of data from multiple sources and from the persistent, instantaneous access to complex cash flow data.
In short, while some companies may be hesitant to employ automated AR processes due to the extra implementation and set-up costs, the range and depth of the eventual risks associated with not embracing automated AR processes means the savings in the long run more than offset the initial investment.
