Being a World-Class Credit Leader in the Age of Digital Transformation
Hackett Research Summary
This Hackett Group research is an actionable summary that drills down on ‘how’ World-Class companies have leveraged digital transformation to excel over their peersExecutive Summary
What is Digital Transformation?
The next big thing for Credit and A/R
As per the Hackett Group survey, a majority of finance executives agree that digital transformation will bring about fundamental change in financial services within a short time frame.
- 97% believe that digital transformation will bring step-change impact on finance function
- 91% expect it will have fundamentally change finance services delivery model in 3-5 years
- 86% believe it will fundamentally change the talent and leadership skills
- However, only 35% think that their teams have the ability and resources to execute on the digital transformation vision
Understanding World-Class Credit and A/R
What is World-Class?
What does it look like, how is it different?
- They are more efficient, doing their work faster and at less cost: World-Class organizations have streamlined their operations by leveraging technology to automate the repetitive, manual processes as well as have reduced dependency on resources
- They are more effective at delivering services to internal and external customers: By automating the core transaction management, A/R teams focus better on customer engagement to improve repeat business and unlock latent business opportunities
World-Class performance focuses on doing more with less
World-Class organizations have been able to largely automate their financial operations and realize up to 45% more savings than their peers. These savings are attributed to:
- Lowered resource costs
- Switching to electronic from paper
- Working capital optimization with faster collections
- Reduced bad-debt and write-offs with worklist prioritization
What Differentiates World-Class
What makes A/R Leaders Stand Out?
By analyzing different indicators, these are the areas where A/R leaders have harnessed technology and cracked the code for being World-Class.
Analysts spend lesser time in clerical work
With the help of technology, such as robots and Artificial Intelligence, analysts in World-Class companies save 24% more time in low-value work such as:
- collecting remittances/claims from emails, web-portals, faxes
- scanning and keying-in data into spreadsheets
- pulling credit details from public financials
- generating account worklists for dunning
Analysts instead focus on strategic tasks, such as researching invalid deductions, controlling credit-risk, reducing critically delinquent accounts.
Advanced reporting and analytics provide better insight
50% of World-Class companies have advanced reporting and analytics capability providing
comprehensive process visibility and helping in decision-making by:
- Drilling down on root cause
- Real time reporting
- Out of the box reporting
Technology positions executives to drive next- level process transformation versus policing metrics and process owners.
What Differentiates World-Class
Teams are more effective
- Manual data entry
- Calculation errors
- Aggregating data from disparate sources
- Lack of complete information
Artificial Intelligence-enabled systems have self learning capability that monitor analyst activity and improve over time, making lower mistakes.
Teams do the right things to collect faster
- Proactive reminders and strategic dunning.
- Prediction of payment date by analyzing customer payment trends.
- Accelerated dispute resolution by predicting dispute validity.
- Automated, proactive credit reviews for identifying high-risk customers.
What Drives World-Class A/R Performance?
What should your Digital Transformation initiative focus on?
As per the Hackett Group study, it is beyond the point where companies are able to debate whether or not to initiate Digital Transformation. It is a low-hanging fruit that warrants immediate focus in order to stay future-ready.
To start with the Digital Transformation journey, finance execs should consider heavy investment in the following areas:
Automation of clerical repetitive tasks across C2C
Core automation means that costs are low and effort is allocated in the right tasks
Single, integrated platform
More effective in delivering services to internal and external stakeholders
AI-driven automation technology
Low-error rates in tasks
Integrated reporting and analytics
Better decision making and insight
Using big-data and machine learning
Improved outcomes of A/R actions – faster, more effective collections
Conclusion
It is too late to be a fence-sitter when it comes to Digital Transformation for Accounts Receivable. But with the recent hype over different options for automation, it is difficult for executives to zero-in on a decision.
The findings highlighted in this e-book describe how World-Class companies have already been able to transform their processes. Rather than starting from scratch, emulating the practices adopted by these high-performing companies is a fail-safe way of embarking on your Digital Transformation journey.
