The Chief Financial Officer (CFO) is often overlooked as an innovative leader within an organization, despite being a key figure. However, as the business world continues to evolve and adapt to advancements in technology and innovation, we must recognize that the CFO’s role has undergone a significant transformation. No longer merely a conservative bookkeeper, the modern CFO has emerged as a proactive fund strategist who actively encourages innovation as a catalyst for growth, spanning generations from Gen X to Gen Z.
The role of the Chief Financial Officer (CFO) has undergone a significant transformation over the years. In the past, Gen X CFOs were mainly responsible for maintaining the company’s books of accounts and producing financial reports. They were reactive, waiting for issues to arise before taking action. However, with the arrival of millennials, also known as Gen Y, the traditional role of the CFO evolved into a more proactive and strategic one that focused on driving growth.
Today, the modern CFO is a critical C-suite executive, with Gen Z CFOs emerging as some of the most important. These CFOs go beyond traditional finance functions, leveraging data to drive business growth and make strategic decisions. However, to effectively play this broader role, CFOs must overcome significant challenges.
In today’s business landscape, accounts receivables optimization is a top priority for CFOs looking to improve liquidity and working capital. According to The Hackett Group, 75% of CFOs in various organizations have already optimized their accounts receivable processes, and 79% of CFOs plan to make these changes permanent.
Despite the benefits of optimizing accounts receivable, CFOs face significant challenges, including cumbersome manual processes, high costs, and time-consuming tasks. As a next-level visionary, every mid-sized company’s CFO needs to address the top three challenges and concerns that come with optimizing accounts receivable, including reducing days sales outstanding (DSO), increasing collections, and automating processes.
Mid-sized businesses face a common challenge in the form of inconsistent accounts receivable processes. Determining the status of receivables and identifying reasons for slow collections can be a time-consuming and difficult task.
In addition, the absence of strong credit management processes and policies can create an AR nightmare. Not all customers pay their debts on time, making it necessary for businesses to determine how much credit to extend to avoid bad debts and negative impacts on cash flow.
Inefficient collection processes can also lead to difficulties in dealing with customers. Poor management of payment follow-ups and last-minute disputes can negatively impact a business’s bottom line. As a result, CFOs play a critical role in minimizing the impact of manual receivables on cash flow and profitability.
To address these issues, businesses must develop standardized accounts receivable processes, including clear credit policies and effective collection strategies. By streamlining processes and implementing automation tools, CFOs can reduce the burden of manual receivables management and improve their company’s financial health.
Mid-sized businesses do not have advanced systems in place to monitor and track daily AR operations. As a substitute, they use free tools such as Excel and spreadsheets to track invoices and payments. For most mid-sized businesses, AR processes are labor-intensive and highly manual. As a result, accounts receivable teams spend even more days managing bills, aggregating remittance information, and matching invoices manually. Delays in invoice delivery due to manual processes can directly impact the timeliness of the payment’s receipt, damaging the overall financial health of a company.
Moreover, AR teams have to spend time aggregating credit information for assessments and invoices before making a collection call. Top CFOs feel that doing mundane AR tasks is not the most productive use of their team’s time. CFOs with strategic perspectives believe that investing in automation is a smart way to allow the AR team to focus on high-value functions.
Most mid-sized businesses prefer in-house tailor-made solutions or legacy ERP systems to manage daily AR operations. In today’s fast-moving business climate, CFOs have realized that ERPs can pose some limitations in terms of improving accounts receivable efficiency.
While most ERPs have modules for managing receivables, they lack the in-depth insight, functionality, and automation required for efficient credit and collections management. Managing accounts receivable with limited ERP functionalities can lead to higher DSOs and bad debts. As a result, CFOs in the mid-market seek specialized AR automation solutions that will sync seamlessly with their existing ERP.
Digital transformation is the need of the hour. CFOs can optimize the overall finance function by automating accounts receivable. Doing so will reduce bad debts and boost working capital.
With growing industry demand and competition, top CFOs are shifting towards leveraging software-as-a-service solutions. At HighRadius, mid-market companies often reach out to us, asking for help with the automation and standardization of AR processes. We always recommend a scalable solution, such as the RadiusOne solution, as the way forward.
With the ever-changing business climate, the risk profiles of customers and industries are constantly changing. As a CFO, it is essential to monitor the creditworthiness of your customers to avoid potential bad debts and ensure a steady cash inflow.
With HighRadius’ RadiusOne credit risk management solution, mid-sized companies can automate credit risk evaluation and credit scoring to expedite the customer onboarding process. The centralized credit information provides the credit team with the required insights to make informed credit decisions and eliminate paper-intensive processes, ultimately saving time and money for the company, improving profitability, and meeting working capital requirements.
Collections play a crucial role in ensuring healthy cash flow. Top CFOs believe that sales are not complete without the successful collection of dues. HighRadius’ RadiusOne Collection Solution provides a comprehensive suite of features to help CFOs streamline their collections processes and improve their overall financial health.
With a prioritized worklist driven by collections strategies, collectors can easily access backup documents and follow up with critical accounts. The solution also provides automated dunning via email with easy-to-create correspondence templates to send and track en masse collections correspondence to scale collections outreach. This reduces operating costs and saves time, ultimately contributing to the long-term sustainability of the company.
RadiusOne solution provides the improved efficiency that today’s CFOs need to manage AR teams. Easily automate the delivery of invoices via emails and A/P software to minimize operating costs. Through a self-service portal, customers can access and manage their invoices and account statements easily.
Customers can make payments in multiple formats and create disputes through the portal. This eventually gives AR teams and collections teams clarity with payments and due dates and saves them a lot of hassle.
Also, with artificial intelligence-enabled data capture for remittances, auto-linking of payments with remittances, and invoice matching, the RadiusOne cash reconciliation solution helps minimize manual intervention and errors in the cash reconciliation process. This saves a lot of time for analysts and helps them bring in cash faster, helping CFOs reduce bad debts and free up working capital.
Successful CFOs understand the importance of integrating new technology and automation solutions with their existing ERP and financial tech stack. While traditional ERPs may have limitations when it comes to managing accounts receivable, mid-sized businesses can easily upgrade their systems with HighRadius’ RadiusOne AR suite.
Our solution offers quick plug-and-play integration with popular ERPs in the mid-market, including Oracle NetSuite, Sage Intacct, and Microsoft Dynamics. This seamless integration saves time and provides CFOs with interconnected systems that work in sync with each other, allowing for clear visibility into finance functions and informed strategic decision-making.
The ever-evolving business world requires CFOs to embrace digital transformation. They need to automate and streamline their accounts receivable processes to stay ahead of the competition. By implementing standardized and efficient AR processes, CFOs can unlock valuable insights, minimize risk, and drive revenue growth.
If you’re a CFO of a mid-sized company, here are some steps you can take to optimize your AR processes:
At HighRadius, we specialize in helping mid-market customers optimize their AR processes and achieve their financial goals. Contact us today for a free demo to learn more about our solutions and how we can help your business grow.
Automate invoicing, collections, deduction, and credit risk management with our AI-powered AR suite and experience enhanced cash flow and lower DSO & bad debt
HighRadius RadiusOne AR Suite provides the complete eInvoicing solution designed to automate your invoice delivery and empower customers with a self-service portal to manage, track and pay invoices. It is quick to deploy and ready to integrate with ERPs like Oracle NetSuite, Sage Intacct, Quickbooks, and scales to meet the needs of your order-to-cash process.
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