10 Questions to Ask Your Accounts Receivables Vendors

Checklist for an Efficient Accounts Receivable's Management Solution

One of the pivotal aspects of efficient AR management is its dynamic nature. With the economic impact of COVID-19, it is more important now than ever to have a fluid blueprint for handling receivables. As per a report by PAYMENTS,  72.5% of the business are adopting A/R automation in 2021. This makes the digital transformation the heart of the new-age-AR model.

Here is what a checklist for an efficient AR solution would look like:

A solution with these features could enable finance teams to:

• Build a proactive approach towards customers.
• Dynamically modify strategies influenced by real-time data and risk alerts.
• Optimize clerical tasks saving up time to focus on the more important activities.
• Improve essential KPIs including bad-debt, DSO, working capital, turnover ratio, collections efficiency index.
• Tailor strategies around customer behavior, improving overall customer experience.

Once businesses understand what the solution offers, it is equally important for them to assess the solution provider and their compatibility with the business and its policies.

What Businesses Should Ask A Prospective Automation Partner

While receivables solutions offer a range of functionalities, businesses need to determine what are their needs. Along with the price, multiple factors come into play when determining the success of the solution; a crucial one being the vendor’s assessment.

Here are some questions that will lead you to your perfect A/R automation partner:-

Asking the right questions can help businesses understand:

1. Vendor compatibility within the industry:

• Looking into the vendor’s customer portfolio to understand what industries they have worked in is essential. Every industry has its own set of standard protocols and practices that any vendor must abide by.
• Every industry vertical has its market segmentation, each demanding its own set of practices. Businesses must ensure that the vendor is neither inadequate too robust for its requirements.
• For mid-market companies, the customer portfolio is diverse, demanding customized, segmented approaches instead of a uniform one. Vendors should be comfortable with accommodating such requests.

2. The technical aspects of the solution:

• While considering a solution, businesses must understand the technical aspects involved, including but not limited to maintenance. Working with vendors that provide flexible and customizable solutions is crucial.
• Long implementation time can lead to a negative impact on the team’s performance and KPIs. It is crucial to ensure that the vendor can provide seamless integration with a business’s technology stack.
  Businesses should opt for cloud-based solutions as they require comparatively less internal IT support and enable data centralization easily.
• Mid-market companies are continually growing and need to be agile with business strategy as per market demands. Accordingly, businesses should opt for vendors who offer API to ensure future modifications in the system without extensive IT support.

3. The data range and capabilities of the solution:

• Data optimization is one of the key aspects of driving businesses towards a digital transformation. It is crucial to understand the type of data the vendor provides and guarantee data security.
• Businesses need to know how the new automation and their current system integrate with each other and understand the data flow. Minimizing redundant data could be an important factor to consider while blueprinting the integration.
• Real-time visibility into critical data is crucial for both analysts and managers. It is essential to ensure that the solution reports KPIs and metrics accurately for management to track the health of receivables while providing analysts with real-time updates of transactions and risk-alerts for a faster and error-free process.

4. The accessibility of the solution:

• The cardinal aspect determining the success of any solution is user adaptability. Businesses need to work with the vendor to understand the interface and ease of usage before moving forward with the software.
• Companies should look for vendors that can customize the solutions in terms of branding which further helps users get acquainted with the system better.
• A day-in-life session helps to evaluate how the solution plays into day to day activities of analysts and how it aids the process. Businesses should ask the vendors to conduct a day-in-life session when considering the solution.

5. The ROI factor:

• While the features promise great results, businesses must evaluate in numbers, the performance of the solution within their environment.
• Understand the ROI the solution will provide within the business through a calculation of profit, optimization of key metrics such as DSO, bad-debt, and working capital that will be achieved.
• It is also important to assess the track records of the vendor in delivering these ROI metrics to their customer. Businesses should always go through customer testimonials of the vendor.

Understanding how multiple vendors approach these concerns can help businesses build their trust in the solution while understanding it’s full potential. Add-ons such as a virtual assistant, in-app voice calling, real-time risk alert can further improve the overall experience with the solution. The success of AR Management solutions largely depends on the relationship between the vendor and the customer. It is essential to assess if the vendor fits within the businesses’ standards before moving forward.

Conclusion

In the after-effects of COVID-19, it is evident that businesses need to adapt and move towards a digital receivables landscape. Although there are multiple solutions available in the market, only the right vendor will aid the digital transformation every growing business requires. The latest IDC MarketScape report takes a deeper dive into the need for digital adaptation for the receivables team and assesses the vendors present in the mid-market. The report has outlined the holistic criteria which are crucial for judging A/R automation solution providers for companies in the mid-market revenue tier.