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Holistic Financial Solution vs. Best-of-Breed Solutions for Finance Function Transformation

29 September, 2022
3min read
Timothy Fogarty, AVP, Digital Transformation
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What you'll learn

  • Discover which is the best fit for your business: holistic financial solution or best-of-breed modules
  • Explore why modernizing the finance team is necessary in today’s fast-paced corporate world
  • Uncover how autonomous finance is empowering finance teams by digitizing day-to-day finance functions 
CONTENT
Modernizing Finance Teams: The Need of the Hour
Holistic Financial Solution vs Best-of-Breed Module
Transforming Finance Landscape Holistically with HighRadius
Going Above And Beyond with Autonomous Finance
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Introduction

Modern finance processes present unique challenges. Finance teams need to constantly reinvent themselves to overcome these challenges and drive revenue and bottom-line growth.

The finance function is the sum of several different processes such as treasury management, accounting, and receivables management. Your business needs to focus on all these activities to be successful. For example, if your finance team is acing collections but struggling with cash forecasting, then you should identify the gaps and strive to standardize operations throughout the business. A simple solution to bridge the hurdles of day-to-day finance operations is to digitally transform the complete finance landscape.

By transforming the entire finance management function digitally, businesses can scale and strive for continuous improvement. But the question is- should businesses invest in a holistic financial solution or a combination of multiple best-of-breed solutions?

In the previous parts of this three-part series, we examined the challenges that a lean finance team encounters and provided technology solutions to combat them. In this last piece, we will offer insights on how to transform the finance landscape and what is the best fit for an organization: a holistic, integrated solution approach or a best-of-breed solution approach.

Modernizing Finance Teams: The Need of the Hour

HighRadius' CFO  survey

Source: HighRadius’ CFO survey

Technologies such as cloud, RPA, and AI are modernizing the finance processes across all industries. Most finance teams in today’s environment perceive themselves to be modern. But, in reality, they continue to depend on several traditional platforms. Many of those who have implemented some degree of automation have often done it haphazardly.

The right way to modernize a finance team is to manage the processes with best-in-class finance automation solutions. By leveraging the right automation tools, employees can shift their time and priorities toward strategic operations by eliminating non-value-adding activities.

Holistic Financial Solution vs Best-of-Breed Module

A holistic financial solution is a single solution comprising a set of integrated modules that streamlines and standardizes all financial activities. It enables you to achieve end-to-end digital transformation of the finance landscape. This allows finance teams to have 360° visibility over the processes and fast-track their day-to-day tasks by providing a standardized workspace.

The best-of-breed solution offers individual modules for each accounts receivable process such as invoicing, collections, credit risk management, and deductions management. These modules can be integrated with each other and other systems such as ERPs via connectors. Finance teams may require advanced features owing to their industry niche, in which case best-of-breed solutions would be beneficial. 

Best-of-breed solutions could be ideal for large enterprises as their processes are already standardized. However, a holistic financial solution is more suited for a mid-sized company embarking on the modernization path.

Transforming Finance Landscape Holistically with HighRadius

To achieve end-to-end automation, a holistic financial solution is necessary, rather than multiple automation solutions that function in silos. The ideal finance management solution encompasses all niche core features and provides scalability in terms of the shifting market trends and changing economy. HighRadius provides holistic financial solutions for the entire finance management process with its suite of solutions that include:

  • Autonomous Receivable: Build a high-performance culture for your finance teams with the world’s only end-to-end order-to-cash software platform. It tailors to the needs of every customer, whether it’s a large global enterprise with multiple business units, a mid-sized company with a simpler IT landscape, or even a small business. 
  • Autonomous Treasury: Achieve end-to-end automation in forecasting and cash management processes to deliver accurate and insightful results with lesser manual efforts.
  • Autonomous Accounting: Record to report suite offers end-to-end financial close automation, AI-powered anomaly detection, account reconciliation, and connected workspaces.
Before diving into how to transform the financial landscape holistically, here are some recommended reads:

  1. How to Go an Extra Mile with a Lean Finance Team
  2. How will Digital First Finance Teams Leverage Automation in 2023?

 

Credit

 
Challenge: Manually aggregating credit data from multiple sources consumes a lot of the account receivable(AR) team’s time and delays customer onboarding.

How HighRadius Helps: Credit Data Auto-Aggregator
The credit data auto-aggregator feature accurately compiles financial statements, client records, trade references, and credit bureau reports from multiple sources. Securely store and access all crucial credit data in one place for faster decision-making.

Challenge: Traditional methods of research and analysis that rely on intuition and opinions to establish credit limits often lead the AR team to set inaccurate credit limits, thus increasing bad debt.

How HighRadius Helps: Configurable rules-based scoring models
With a rule-based scoring model, AR teams can set rules to automatically assess customers based on factors such as prior credit history, trade references, financial records, etc. Based on the auto-generated credit score, AR teams can assign credit limits accurately.

Challenge: Due to lack of real-time data, the AR team has limited visibility over critical customers and may miss out on prioritizing high-risk accounts.

How HighRadius Helps: Configurable rule-based periodic review alerts
Get real-time credit risk alerts based on the rules set for each customer on parameters such as customer risk ratings, bankruptcy news, and credit information. Based on the alerts, re-evaluate customer credit limits and mitigate potential risks.


 

Billing & Payments

 
Challenge: Sending invoices late often results in poor customer experience and payment delays.

How HighRadius Helps: Automated invoice delivery
Automatically schedule invoice delivery via emails or auto-push invoice data into customer portals, AP portals, and accounting software while keeping your existing accounting system in sync. It allows AR teams to deliver recurring invoices in the customer’s preferred mode and enhance customer experience.

Challenge: Invoices sent through a combination of digital and physical channels make it difficult for AR teams to track them in real-time.

How HighRadius Helps: Invoice open-tracking
The e-Invoicing App automatically verifies the status of open invoices, helping save the time and effort required to log into multiple customer portals to extract the data manually. Payment statuses are auto-populated on the worklist for each open invoice.

Challenge: Referring to paper-based invoice documents for dispute verification becomes difficult for AR teams as invoices are stored in physical warehouses.

How HighRadius Helps: Supplier-branded customer portal
The custom-branded self-service portal provides a personal touch to your customers and allows them to manage their invoices and account statements, raise disputes, and make payments. It enables AR teams to access invoices in real-time and supports faster dispute resolution.


 

Collections

 
Challenge: In the absence of effective dunning strategies, AR teams are often unable to reach customers on time, thus increasing the risk of write-offs and DSO.

How HighRadius Helps: Configurable templates for automated dunning
Automated dunning via email with easy-to-create correspondence templates helps send and track correspondence en masse. Moreover, options like “send invoice as an attachment” or a “pay now” link embedded in dunning emails make the payment process easier for customers, allowing AR teams to collect faster.

Challenge: AR teams often fail to identify and reach out to high-risk accounts on time due to the absence of appropriate strategies for segmenting customers into risk buckets (e.g. low-risk, high-risk)

How HighRadius Helps: Configurable rules-based prioritization worklist
Customize rules to prioritize collections worklist based on payment history, dollar amount, and/or top customers and track and collect faster from customers. The prioritized worklist auto-recommends action items for the AR teams to optimize dunning outreach and maximize cash recovery.

Challenge: Customer data such as payment history, invoice details, etc. stored in spreadsheets often gets lost or corrupted. As a result, AR teams spend hours retrieving this information for dunning, leading to delayed payment recovery and poor customer experience.

How HighRadius Helps: Centralized repository
Automatically stores and accesses customer information, payment commitments, payment history, and interaction history in real-time with a centralized repository. AR teams can easily retrieve lost or corrupted data with just a click of a button instead of searching through multiple data sources.


 

Cash Application

 
Challenge: Due to the different sources and forms of remittances, AR teams have difficulty gathering remittance information, resulting in a delayed cash application process.

How HighRadius Helps: Automated remittance aggregation
Automatically extract accurate remittance details from check stubs, emails, and attachments of all formats with the OCR engine. Moreover, aggregate remittance data securely from customer portals via RPA-assisted web-bots. This reduces the time and effort needed to aggregate remittance information, thus enabling the AR team to focus on other critical tasks.

Challenge: Manually extracting invoice data from backup documents and matching it with payments is time-intensive, thus increasing the overall time to cash.

How HighRadius Helps: Smart matching with invoice details and PO numbers
Map payments with open invoices or PO numbers using a three-way match at the line-item level and identify deductions, discounts, and other inconsistencies. Moreover, leverage auto-recommendations for non-invoice reference numbers for faster exception handling. It enables AR teams to fast-track cash accounting by eliminating manual interventions.

Challenge: The AR team spends a significant amount of time re-entering and reconfiguring each file before posting it to the ERP, which delays the cash posting process.

How HighRadius Helps: Seamless cash posting
Generate enriched files in ERP-compatible formats and post cash to the system directly. Likewise, assign ERP-compatible reason codes to payment deductions and exceptions. It allows the AR team to accelerate the process and avoid productivity loss caused by manually changing file formats.


 

Treasury

 
Challenge: Lean teams often fail to forecast cash accurately due to a lack of a defined treasury role and work segregation.

How HighRadius Helps: Category and company level forecasting
Forecast with the highest accuracy across all cash flow categories using formula-based or off-the-shelf algorithms. The intuitive interface of our product, which resembles spreadsheets, enables treasury teams to save time and increase productivity by being able to use the forecasting models without any training.

Challenge: The treasury team frequently struggles to collect data on time for accurate cash forecasting due to non-standardized processes and a lack of visibility into real-time data.

How HighRadius Helps: Connectivity with sources
Leverage connected sources to auto-accumulate data from ERPs, banks, and other financial systems. This enables treasury teams to have complete global cash visibility. The teams can also use the real-time data preparation and cleansing features to manage data formatting and other data quality issues.

Challenge: Variances are often documented incorrectly as a result of the erroneous compilation of accounting data in spreadsheets. Thus, the treasury team fails to unlock trapped working capital.

How HighRadius Helps: Detailed variance analysis
Improve accuracy by analyzing variances at regional, company, and currency-level with automated variance analysis. It allows the treasury team to account for variance trends without using forecasts to make accurate business decisions.


 

Record to Report

 
Challenge: Manually compiling documents for the financial close process is time-intensive, leading to delays and errors in the process.

How HighRadius Helps: End-to-end financial close automation
Enable day-zero close with close task and project templates, automated workflows, and accounting anomaly detection to support end-to-end financial close automation. It enables finance teams to close the books faster and provide real-time data to stakeholders.

Challenge: Most account reconciliation workflows are highly prone to errors when performed manually.

How HighRadius Helps: AI-powered anomalies detection
Address mismatches between general ledgers and sub-ledgers before book closure, leaving only a minimal number of open items. It enables finance teams to resolve open items quickly with clearly defined actions and timelines.

Going Above And Beyond with Autonomous Finance

Autonomous finance enables the completion of day-to-day financial operations with minimum human intervention. Autonomous finance solutions bring modern digital transformation capabilities like Artificial Intelligence, Robotic Process Automation, Natural Language Processing, and Connected Workspaces as out-of-the-box features for the finance and accounting domain. With autonomous finance solutions, teams can dedicate more time to strategic tasks such as building customer relationships, persuading past-due accounts to pay, and developing stronger credit models and policies. 

HighRadius Autonomous Software delivers measurable business outcomes such as DSO reduction, working capital optimization, bad-debt reduction, reduced month-end close timelines, and improved productivity. The Autonomous Finance platform is currently available for three key parts of the Office of the CFO: Autonomous Receivables for Order to Cash, Autonomous Treasury for Treasury and Risk Management, and Autonomous Accounting for Record to Report.

Keep your finance teams in high gear with our Autonomous Finance Platform.

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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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