Hackett Research Summary

Being a World-Class Credit Leader in the Age of Digital Transformation

This Hackett Group research is an actionable summary that drills down on ‘how’ World-Class companies have leveraged digital transformation to excel over their peers

CHAPTER 01

Executive 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

 

 

Finance leaders agree that digital transformation will drive efficiencies in finance!

 

 

 

 

 

Finance leaders need to propel digital transformation!

CHAPTER 02

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

Finance cost as percentage of revenue

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
CHAPTER 03

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

Percentage of analysts’ time spent collecting and compiling vs. analyzing dataWith 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

Mature scorecard program with both financial and non-financial metrics

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.

Teams are more effective

By automating business processes, A/R teams of World-Class companies are more effective and commit 66% lower errors associated with:

  • 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

Digital transformation enables A/R teams of World-Class companies to collect 95% credit sales within payment terms. This is achieved by using technology that allows:

  • 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
CHAPTER 04

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.