Cost vs Value: Finding the Right Partner for Your Accounts Receivable Objectives

13 May, 2022
4min read
Brett Johnson, AVP, Global Enablement
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What you'll learn

  • Tips to overcome preconceptions that B2B CFO office buyers tend to have when purchasing finance solutions 
  • Downsides of buying low-cost tools that offer limited features and functionalities
  • Tips for the CFO office team to pick the right AR automation software
Why should B2B buyers choose value over price?
The need for a data-driven, intelligent accounts receivable automation software
Mistakes that B2B buyers should avoid while choosing accounts receivable automation software vendor
What are the downsides of settling for a limited AR process improvement solution ?
How to make the right AR automation software purchase?
What value does HighRadius provide you?
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Why should B2B buyers choose value over price?

Businesses today focus on quality, sustainability, and time-bound implementation when they purchase B2B software. Given that CFO offices need to focus on revenue leaks and keep costs under control, a lot of procurement decisions weigh more on the price of software than the benefits it brings to the table.

77% of B2B buyers state that their latest purchase was very complex or difficult.
One reason for this is that the costs that B2B buyers are willing to pay don’t match up with the big results they expect. Companies put money into digital transformation to make more money and save money. Unfortunately, when it comes to investment, companies approach digital transformation with much smaller budgets than are needed. Buying the cheaper alternatives in the market products cannot deliver maximum business value. Because of this, any B2B software purchase should start with the value and then move on to the cost.

B2B buying is often riddled with the same biases that professionals have when purchasing B2C solutions where out of habit we look for solutions that are economical or free. This behavior doesn’t work for B2B purchases because businesses need to invest in solutions that solve all their challenges. In this article, we focus on the key mistakes B2B CFO office buyers should watch out for when evaluating accounts receivable software solutions.

The need for a data-driven, intelligent accounts receivable automation software

Accounts receivable processes are repetitive and laborious CFOs need to carefully monitor AR management because it involves the collection of payments for the goods sold and this feeds your cash flow. Automating accounts receivable using ERPs and advanced automation software such as HighRadius’ Autonomous Receivables and RadiusOne AR suite is increasingly becoming popular as it helps boost cash flow.

Studies show that accounts receivable (AR) automation has helped SMBs process payments faster (87%), improve team efficiency (79%), and deliver superior customer experiences (75%). However, there is a common misconception that accounts receivable automation is expensive and takes longer to deliver a good ROI. This fear pushes businesses into buying lower-priced, basic accounting software that may not meet their needs, and ultimately ends up a failure. Organizations have to peel back these myths in order to uncover the true value of AR automation and realize ROI.

Furthermore, the pandemic has accelerated the demand for integrated invoice-to-cash (I2C) applications as companies are looking to urgently optimize internal accounts receivable processes and drive faster cash collections.

In fact, in 2022 Gartner launched its first magic quadrant for ‘integrated invoice-to-cash(I2C) applications’ and called out that by 2024, CIOs and finance teams will spend $3 billion annually on I2C applications. The report also emphasized that existing ERP systems and homegrown applications lack the functionality needed for running optimized I2C operations. There is an increase in demand for “integrated” invoice to cash applications for managing the process end-to-end.

Needless to say, it is essential for CFO offices to give receivable software its due importance and view it from a value standpoint as it contributes to the overall success and profit of the businesses.

Mistakes that B2B buyers should avoid while choosing accounts receivable automation software vendor

Now that we’ve established the need to have an accounts receivable automation software, it is important to avoid the common mistakes that B2B businesses make when choosing an accounts receivable automation software vendor.

You must also evaluate the benefits of implementing an integrated accounts receivable solution. Identify the gaps and process challenges in your AR function to choose the solution that best meets your needs. Focus on the product’s capability to deliver a solution first before considering the costs involved in implementing the product.

Though every organization has tight budgets, seeking for discounts or cheaper solutions might not always be wise. Low-cost solutions may not offer you the desired features and help you scale as your business grows. It limits the value that you can add to your team and digital transformation initiatives. For example, the common solution that businesses opt for bookkeeping is accounting software. Traditional software may help meet your short-term requirements, but for success in the long term, you’ll need to invest in intelligent, scalable solutions that enable seamless data sharing and integrations.
Here are a few common mistakes that businesses make when they focus more on the cost of the solution rather than on the value that it offers:

  • Looking for solutions for accounts receivable objectives without mapping the existing challenges:
    Understand why automation is needed and which processes can be automated successfully before investing in any automation technology. Choosing a solution without mapping your current processes is one of the major reasons why digital transformation projects fail. It is crucial that you identify the actual process needs, bottlenecks and discrepancies before jumping onto a software. Most companies build their solutions based on assumptions rather than data-driven insights. They focus on the processes that generate the most noise and overlook the actual cause of the problem.
  • Narrow approach to automation:
    You need to take into account the end-to-end AR processes rather than have a siloed focus. It is vital that you include the collections, cash application, credit management, invoice, deduction, and sales teams in planning your digital transformation. This will enable you to get a complete view of your O2C space. It is also imperative to talk to your customers to know about the challenges they face when making payments or raising disputes. It is only when you analyze the multiple aspects of the invoice-to-cash cycle that you can identify the bottlenecks in credit, invoicing, and cash application that delay cash inflows.
  • Focusing on short-term benefits :
    By automating AR processes, you can streamline workflows, cut costs, save time, improve competitiveness, and enhance customer satisfaction. Many firms, however, solely focus on increasing revenue rather than improving the efficiency of their existing processes to grow the bottom-line. This approach puts you in a constant state of fire-fighting instead of helping you achieve long-term success..
  • Compromising on modern automation solutions:
    There might be many factors that influence a purchasing decision but if it finally always boils down to the price of the product alone, then that’s a red flag. Companies often turn to low-cost basic accounting solutions in an attempt to alleviate their immediate challenges. However, these solutions may be too basic for their requirements. The receivables solutions available today offer a variety of functionalities, but businesses must analyze their needs before making a choice. In addition to price, multiple factors come into play when determining the viability of an AR solution. Getting a lower-priced solution that doesn’t fully solve your process optimization challenges will not help you in the long run.

What are the downsides of settling for a limited AR process improvement solution ?

Using a basic solution is just like holding your business together with duct tape. As with duct tape, there is a limit to how much you can hold together before things start bursting. Sooner or later, the wear and tear will become obvious. Similarly, as your business grows, basic software can only cope with so much, leaving your business to risks such as:

  • No support for growth:
    While scaling up, finance leaders must ensure that their teams are equipped with the appropriate tools to manage the increasing volume of invoices and accounting requirements. For many mid-market companies, credit sales converting into cash is the driving force behind their operations. Mid-sized businesses are increasingly adopting technology-enabled solutions to improve AR. But relying on accounting software alone will work only till the time your business transactions stay within a certain threshold. When your finance teams feel overwhelmed with data or find it difficult to manage the volume of operations, it indicates your business has outgrown the software. Unlike software that is designed for heavy lifting, basic accounting systems aren’t robust enough to handle large volumes of financial data or to provide the financial transparency your business needs to scale. In addition, handling global transactions and expansion also becomes quite challenging.
  • Limited features hinder your day-to-day processes:
    Free accounting software tools are often not designed to handle complex financial data with multiple variables. Such software lack sophisticated financial management features, such as comprehensive reporting, tracking, advanced cash flow analysis, etc. Entry-level accounting software has limited scope, and growing businesses quickly realize its shortcomings. Despite manual workarounds and complementary tools that address many of the shortcomings, eventually, those steps are not enough, and challenges arise that stifle growth. Many times, the CFO office has to manually pull and enter data from disparate systems. These cumbersome manual processes are prone to error and leave little time for analysis and building value.
  • Course correction is an expensive affair:
    Once you are aware that your basic accounting system is holding your company back, you need to evaluate and select a more powerful solution. This can be challenging for many businesses because they have wasted a great deal of time and resources implementing starter accounting systems. You may end up circling back to where you started–spreadsheets, which are chaotic for rapidly growing businesses. The various limitations that you will run into will force you to upgrade to a better solution. It is imperative that CFOs who are planning ERPs for their organizations ensure that they plug-in AR automation during the early stages of growth in order to ensure seamless operations even when transaction volumes increase. Businesses can eliminate onerous manual processes in favor of automation, freeing up staff for analysis and initiatives that help grow profits.

How to make the right AR automation software purchase?

Moving away from your basic accounting solution and getting started with AR automation software can be a daunting task. Many find that they wish they had upgraded earlier. Now that we are looking beyond price, CFOs should look into the value that an AR automation software brings to the table and choose an appropriate digital transformation partner. Here’s what you can expect by choosing the right AR automation software for your mid-market business:

  • Assessment: Examine your internal AR process and identify its challenges and improvement areas.
  • Benchmarking: Perform a benchmarking exercise to identify best-in-class metrics for your industry and set clear automation goals.
  • Compare solutions: Explore the different automation solutions available in the market to determine which is the one that best suits your needs.
  • Vendor evaluation: Review the automation solutions available in the market based on their success rates, industry credibility, and solution features.
  • Take a demo: Take a demo and consult the vendor for suggestions on how to achieve your automation goals.
  • Ready to go: Select your automation software and vendor, and get started on your digital transformation journey.

What value does HighRadius provide you?

Value from investment and time savings are among the most influential factors in any purchase decision. In accounts receivable processes, time truly is money. At HighRadius, we value your time. Our seamless integration with ERP systems helps businesses streamline processes and increase operational efficiencies, enabling your finance team to focus on high-value tasks. We automate AR workflows to help you minimize manual work, in turn reducing the time needed to correct errors and the number of unhappy customers.

We all know that cash flow can make or break your business. With technology-fueled approaches, we enable your business to collect and apply payments faster by eliminating gaps and delays in collections that otherwise is the norm. The cost of receivables automation does more than pay for itself. It also serves as a lifesaver for businesses who are dreading the idea of calling their late-paying customers.

HighRadius helps you achieve tangible and meaningful return on investment. Our intelligent systems offer data analytics features to extract real-time and accurate information and generate reports in the desired format. These reports help analyze your organization’s current situation and refine your decision-making process.

HighRadius’ solutions enable mid-market businesses to digitize their accounts receivable operations and improve AR efficiencies, reduce DSOs, automate the collection process, mitigate credit risk, increase cash flow, and accelerate cash application. Mid-sized business owners can now put their AR on autopilot and overcome the hiccups that negatively impact business performance. If you’re keen to modernize your existing accounting capabilities, SCHEDULE A DEMO with HighRadius and experience how our solution can resolve your accounting problems.

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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.

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