The accounts receivable function can learn a lot from what is going on in the accounts payable universe. Much of the evolution of the payments industry gets it impetus from Accounts Payable, and that is going to necessarily affect Accounts Receivable. In addition, how Accounts Payable processes invoices can impact how Accounts Receivable departments transmit invoice details.
Many companies have implemented online Accounts Payable portals to facilitate the electronic capture of invoices. The main goal of the underlying e-payables initiative is the purchase-to-pay process efficiency. However, Accounts Payable cannot achieve their automation objectives if they do not realize a high level of supplier participation.
The problem is buyers, due to self-interest, seldom give much attention to their suppliers’ needs. Inadvertently, Accounts Payable departments are collectively forcing suppliers to deal with a multitude of different portals and processes. For Accounts Receivable, these multiple systems have increased the cost of collections due to data entry and research tasks being pushed out of Accounts Payable and onto their trading partners’ Accounts Receivable departments. If invoice details must be entered or uploaded manually, this can create an excessive burden on the Accounts Receivable or Credit function. This is the opposite of any desired outcome of an e-commerce initiative.
Likewise, suppliers that implement an Electronic Invoice Presentment and Payment(EIPP) solution hope to boost order-to-cash efficiency and cut costs. Facing a variety of customer Accounts Payable portals, an EIPP solution must be able to transmit invoices to a broad spectrum of online systems. As with Accounts Payable portals, for these EIPP portals to be successful, one needs to have enough customers using it to both access invoices and then process payments.
Ultimately, a well managed EIPP system will offer efficiency, visibility, and control but only as long as a majority of transactions are processed through the solution. In order to achieve optimum performance, there are 4 things Credit and Accounts Receivable can do:
How many of the 4 items above has your company/department implemented and what results have you seen?
The Trillion Dollar A/R Question
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