In our previous post, we discussed what was necessary to manage the shift from a paper accounts receivable environment to an electronic accounts receivable process through a Receivables Management System. The conclusion was that to effectively make the shift, the investment in the human infrastructure has to be balanced with the focus on the technology infrastructure. In other words, in addition to appropriate Accounts Receivable Software, a comprehensive change leadership initiative also has to be deployed.
But where do you start….on either piece?
Actually the paths are not unique, but in fact, have to be melded into one to achieve ultimate success. Accounts Receivable transformation encompasses an orchestrated blending of processes, people and technology. Focusing on one tenant without the other two will deliver a sub-optimal result.
As with any initiative, the path starts with identification of a need. Needs identification comes about as a result of 1) examining the effectiveness of existing processes,
2) listening to and observing the strain and stress the current approach is putting on the organization, and
3) hearing from the customer where you are lagging compared to your competition.
Did you notice that second item? This is where the change efforts start as well. Who knows the most about what works and what doesn’t work? The individuals performing it! By involving the team in coming up with ideas and potential solutions for how things can be done differently, you also just engaged them in the change effort. Remember, change management isn’t something you “do to” an organization; it’s something you “lead them through”.
Once the need is clearly understood then steps have to be taken to quantify the impacts of not addressing the gaps and the benefits achieved by moving to an automated approach. This requires gaining “buy-in” and support from not only the executives but also from process partners and other key stakeholders throughout the organization.
Defining the communications strategy to be leveraged around the change is a critical second phase of your change management efforts. Peer organizations don’t need to just be informed, but also involved in a two-way dialogue and feedback process that solidifies all aspects of the Accounts Receivable automation initiative. If workgroups with whom your organization interfaces feel as if something is being pursued “around them”, then the effort will face resistance before it is ever off the ground. As former US President Woodrow Wilson said, “If you want to make enemies, just start changing something!”
Plus, these process partners are critical in assisting with the business requirements definition which is the next phase of the Receivables Management Software technology review.
As demonstrated by a McKinsey Group study performed in March 2010. Organizations that identified current capabilities and desired future capabilities were far more successful than organizations that did not consider these factors. Likewise, companies that engaged the individuals within the organization in this process were more capable of meeting their transformation goals. *Refer to the full study performed by the McKinsey Group HERE.
Once the processes and supporting technology requirements are fully defined, steps can be taken to identify the Accounts Receivable software that most effectively meets the needs of the business for deployment.
Much like the technology deployment follows a project plan, the associated change management efforts must follow a similar approach. Accounts Receivable transformation efforts require a strategic plan and roadmap for the transition of the human infrastructure that follows a complementary timeline to the technology deployment.
As a result, just like there must a project manager with specific expertise in how to drive a successful deployment of the Receivables Management System, the company must also invest in the change management expertise and planning necessary to lead the organization through the change. Without managing the change associated with the shift to electronic Accounts Receivable, the company is destined to fall into the pool of organizations that invested a great deal into a system that now sits idle because the organization was not “prepared” to embrace it.
Are you “prepared” to embrace change and effectively make the shift to electronic Accounts Receivable? If not, what are the challenges you foresee facing?
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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.