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AR Process: Traditional v/s Modern Solutions

2 September, 2022
8 min read
Joe Fischer,
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What you'll learn

  • To ensure faster customer onboarding, businesses are setting up automated email reminder systems for proactive onboarding.
  • Employees are saving themselves from tedious manual tasks by automating their workflows.
6 Steps in your AR process that can be automated easily
At HighRadius
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Accounts receivables (AR) management is an important accounting function that impacts cash flow and working capital. The longer an account or invoice stays as an open receivable, the lower is the chance of it getting collected. A strong accounts receivable process ensures that cash is collected before the due date and bad debts are minimized. A robust accounts receivable process assists in determining clients’ creditworthiness, securing timely payments, and maintaining healthy customer relationships.

What’s an AR process?

The longer your receivables go unpaid, the more difficult it will be to secure capital to manufacture items or develop services for future sales. Uncollected payments deplete working capital and cause business cycles to be delayed, thus negatively affecting your business cash flow.

6 Steps in your AR process that can be automated easily

Businesses that continue to use traditional AR practices despite technological advancements are likely to find it difficult to manage their invoices, receivables, and cash flow, especially during volatile economic conditions. 

At HighRadius we guide our customers to establish a foolproof automated AR management system that minimizes collection costs and efforts and lowers days sales outstanding(DSO). Our automated AR solutions help in digitizing various elements of the accounts receivable process across different industry sectors.

Let’s take a look at the different steps in AR where automation can assist businesses.

1. Customer onboarding and credit risk management

Businesses that use traditional paper-based credit applications have minimal control over the information filled in by the customers. This often leads to delays in onboarding customers due to incomplete or incorrect information. As a result, constant back-and-forth with customers is needed to resolve the data discrepancies, which hampers customer relationships.

For companies operating globally, it is even more difficult for the credit teams to support the huge volume of customized credit applications in terms of geographies, languages, customer segments, etc. with limited resources.

This is where HighRadius’s Credit Risk Application solution helps. We enable you to reestablish customer relationships and onboard customers faster using online credit application forms. These electronic forms have mandatory fields to ensure that there is no missing information. 

Our solution also allows you to customize the credit application form with configurable fields based on customer segments, languages, countries, and other necessary criteria. To ensure faster onboarding, you can also set up an automated email reminder system for proactive onboarding. HighRadius’s autonomous solutions have helped businesses reduce their customer onboarding time by 90% and enabled credit teams to focus on other important tasks.

2. Data aggregation 

Many businesses use manual data aggregation processes which restrain finance teams from performing other strategic tasks.

Analysts often end up spending a major share of their time in data collection—aggregating account details, payment remittances, dunning records, retrieving missing information, etc. For businesses that work across multiple systems and have their data scattered across various platforms, analysts often have to scout information manually from multiple sources—remittance extraction through emails, AP portals, snail mails, customer websites, telephonic dunning, physical checks, etc.

Such aggregation is time-consuming and results in redundant data and storage format misalignment. 

This is where HighRadius’s Cash Reconciliation Application can help you. Our solutions automate and streamline AR data aggregation processes. Embedded with industry best practices, it enables you to easily collate remittance information in a single format that’s consumable throughout the organization. You can also establish different data extraction tools to automate your remittance data aggregation:

  • OCR Engines: Optical Character Recognition engine helps capture and extract information from physical checks and scanned mails, and store them online.
  • Email Parsing Engines: This engine captures the needed information from email attachments and the body of the email and stores them at a single location.
  • Web Bots: Website bots are robots that can crawl through your customer’s website and download the associated remittance information from there. 

You can also integrate your ERP system(s) into our cloud to make data extraction and storage easier. Our application will then automatically extract data from your ERP and update the master data with the latest information from various sources.

3. Collection worklist prioritization

The collection process is the most important aspect of the order to cash cycle. But it is also prone to various bottlenecks. The most common hurdle is managing the collections worklist. 

Analysts often miss out on high dollar value or high-risk customers due to a lack of visibility into the account details. Overlooking high-risk customers who owe large amounts delays the cash flow and pushes the overdue account towards bad debt. This also impacts the DSO resulting in a hampered return on investment(ROI).

To avoid such instances, you can leverage HighRadius’s Collections Application software, and create an AI-enabled prioritized worklist to avoid missing out on high-priority or high-risk customers. The solution automatically collates the data in one place and helps in customer segmentation into different buckets based on various factors, such as—account aging, credit risk, payment history, payment size, region, currency type, and so on. The software automatically identifies the critical customers before they turn delinquent and also enables touchless collections for low-priority customers.

4. Dunning

When it comes to collections dunning, analysts spend a lot of time gathering information, drafting dunning emails, making calls, logging notes, creating promise-to-pays, retrieving interaction history, and formulating reports. This hampers the productivity of the analysts who have to scout through information spread across different multiple sources. 

Collector productivity increased by 30% with touchless dunning and automation

Use HighRadius’s Collections Application software to automate the repetitive and tedious steps in your collections process. The touchless dunning via emails and fax, available in multiple languages across a centralized repository enables the collectors to view the entire customer data on the dashboard itself. 

Our solution also automates manual repetitive tasks such as creating notes, emails, and promises-to-pay and allows collectors to focus on building robust collection strategies.

5. Available payment options

The availability of preferred payment options could make all the difference between getting paid and accounts going delinquent. Despite knowing this, many businesses stick to traditional payment methods such as checks, which not only take a lot of time to process but also invite additional overhead costs. 

HighRadius’s Collection Application can make AR collections easier for you and your customers. Our solution enables your clients to access and manage their bills and account statements from anywhere using a cloud-based self-service portal. 

Customers can make payments easily through this self-managed portal using a variety of payment methods available, including ACH, credit cards, virtual cards, and creating dispute claims if necessary. The ability to select a preferred payment method could greatly enhance customer satisfaction and expedite the payment procedure.

6. Dispute resolution

Your business is likely to experience a decline in profitability when a significant amount of potential working capital is stuck in disputes. To resolve this, AR teams have to invest a lot of time in labor-intensive manual document collection tasks to confirm and authenticate the acquired information. This tedious and manual-extensive method impacts resource use, lowers productivity, and also hampers customer relationships.

HighRadius’s Cash Reconciliation Application supports easy dispute resolution and helps reduce DSO. With automation, you can eliminate manual and repetitive tasks by early deduction identification, right at the source based on short payments or over-payments, and enable faster recovery. This also helps reduce the resolution time, increase accuracy, minimize financial losses, and improve cash flow.

At HighRadius

At HighRadius we help businesses automate their accounts receivables model and unlock the features and functionality of AR automation to its fullest. Our solution includes a set of AI-powered solutions designed to support AR processing for companies across industries. HighRadius solution provides

  • Automated invoicing
  • Automated data aggregation
  • Prioritized worklists
  • Buyer’s accounting system integration
  • Automated dunning
  • Fast track collections

Want to learn more about how to reduce DSO and avoid bad debts? Talk to our experts.

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