Let’s start by looking at the overall impact the global pandemic has had on the way we do business. The current outbreak has severe economic consequences across the globe. Small and medium businesses (SMBs) face a cash crunch with an adverse effect on revenue cycles, working capital, and cash flow as it is strenuous to handle the AR process in this work-from-home situation.
According to a study by Mastercard, over 38% of SMBs in the U.S. and Canada are experiencing cash flow issues associated with late payments. The uncertainty of the future has forced them to rethink and reconfigure business strategies to improve their AR processes for continued growth. Digital transformation has been a savior in this cash-strapped economy.
In SMB Group’s SMB Digital Transformation Study, 82% of SMBs agreed that using technology effectively is key to their business’s survival and growth.
Even as companies are postponing their automation plans, due to budget constraints, at HighRadius, we have customers reaching out to us looking for solutions. Our advice to mid-sized businesses seeking strategic solutions to solve AR challenges is to turn to digital transformation.
Let’s see how technology can automate many aspects of your accounts receivables…
The growth opportunity provided by this crisis has urged businesses to look for scalable solutions that can help increase the operational efficiency of back-office AR processes. Digital transformation in the finance industry has now become a part of a successful business strategy.
According to The Hackett Group’s Covid-19 Response Poll, despite the recession, 64% of finance organizations are launching new digital projects.
But what are the actual benefits associated with automating your company’s finance function? Is it worth the time and effort?
Having an automated receivables management in place can help in:
Most mid-sized businesses struggle with manual reconciliation due to paper-based AR processes. Leveraging automation helps businesses in auto-aggregation of remittance through multiple channels (email, web-portals, EDI) and auto-mapping of invoices with payments to ensure same-day cash posting. It would also eliminate human errors and reduce costs by eliminating lockbox key-in fees.
Companies spend a lot of time aggregating credit information from different sources to glean a customer’s credit score, which results in a delay in onboarding new customers and blocked orders. With the introduction of intelligent automation in Credit Management, you will not only onboard customers faster but also run on-time periodic reviews and handle blocked orders with just a single click.
Manual dunning is a hectic and time-consuming process in the absence of a prioritized worklist. Automation helps you create a prioritized worklist with reference documents for analysts to follow up with at-risk customer accounts and minimize the Days Sales Outstanding (DSO). Apart from that, features such as automated correspondence and a central repository for backup documents could help the collection team in outlining proactive collection strategies.
Companies spend a lot of time gathering data and evidence to check the validity of a dispute without any automation. Leveraging automation enables the automatic aggregation of all backup documents to check the validity of the deduction claim, reduce bad debt, and build customer trust.
Automating AR processes will save time in tasks that require manual intervention, and are error-prone. The time saved could be used in high-impact tasks such as collecting from a high-risk customer, which would improve the overall efficiency and productivity of your AR teams.
The challenges for cash forecasting are numerous due to the sheer volume of data, range of systems, and the number of entities involved. The presence of an accurate and reliable cash forecasting process has a positive impact on the working capital of a business. It provides end-to-end control and visibility of the AR to allow the business to become more efficient with regards to how they manage cash.
Digital transformation is happening and it’s essential to prepare for a digital future to ensure business growth and continuity. Despite the economic turmoil created by the COVID-19 pandemic, mid-sized businesses are trying to cope up but hidden operational costs associated with AR processes could pose a major challenge. Identifying such hidden costs and leveraging technology to eliminate them could save a lot of money and, at the same time, improve the overall process efficiency. Transforming accounts receivable is key to make your business stand ahead of the competition and helps in securing essential revenue required for a scalable future.
Do you want to learn more about adopting digital transformation to achieve a faster time-to-cash? Read about how to improve cash flow by reducing Days Sales Outstanding (DSO) in mid-sized businesses.
The HighRadius RadiusOne A/R Suite is a complete accounts receivables solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne A/R Apps to improve productivity, maximize working capital, and enable faster cash conversion. Affordable, quick to deploy, and functionality-rich: it is pre-loaded with industry-specific best-practices and ready-to-plug with popular ERPs such as NetSuite and Sage Intacct. The HighRadius RadiusOne A/R Suite is designed to automate labor-intensive processes while streamlining credit and collections activities for faster A/R processing, better cash flow and improved profitability.
Lightning-fast Remote Deployment | Minimal IT Dependency Prepackaged Modules with Industry-Specific Best Practices.