Explore real-world accounting horror stories on the cost of holding receivables from SMB finance executives and learn how AR automation helps to create better bottom-line impact.
“Current processes are deprived of account prioritization. The inefficient collection strategies slow down the process and lead to large overdue balances.”
Listening to the CFO of a Fortune 1000 F&B company, it may seem that the woes of receivables are never-ending. This rings true, especially when AR teams are struggling to stay on top of critical accounts to get paid faster. Let’s go through a typical day in the life of a collector. They spend hours calling and dunning customers to get them to pay pastdue invoices.
Under the mountain of outstanding receivables and pending collection calls, it gets difficult to keep track of critical accounts in the highest overdue bucket. The impact of these overdue invoices could be significant on the bottom line, if not proactively addressed. As per PYMTS, 67.9% of firms that receive more than half of their payments late experience cash-flow problems.
“Reporting is difficult and clumsy using excel. We have a difficult time generating the type of ROI reports that we need or would like to have for business purposes.”
The Vice President of a leading Architectural Services firm on the West coast opened up about the need to keep up with the changing pace of reporting requirements. An Excel-based reporting system could be highly tedious, manual, and time-consuming. In the age run aground by spreadsheets, it’s hard to keep track of the AR team’s performance and productivity.
Most businesses tend to rely on age-old business metrics and data which could prove to be catastrophic for the company. And what good is data if it’s not utilized for strategizing better profit margins?
“Have to keep a manual record of reminder calls, emails, and blocked orders. This method of tracking information is taxing and error-prone.”
Lost in the wilderness of manual record-keeping methods, the VP of a SaaS company with 100% YoY growth experienced first-hand how poor AR data management practices impact the bottom-line. Manual data management results in high OpEx that ultimately diminishes your earnings. In a business with multiple parallel operations, keeping track of past and present information could be difficult.
AR analysts manually go through piles of data to find essential customer information. A large volume of scattered data is not much help unless you have the right tools to collate them. With the rising volume of invoices, keeping track of past customer communications and transaction histories could be difficult.
“We have to manually pull in the remittance information hosted on the web portals which gets quite tedious and time-consuming.”
An executive VP from an IT firm shared that their AR analysts spend countless hours manually acquiring remittance data from web portals. Manual remittance aggregation is one of the main causes of delayed time-to-cash. As a domino effect, finance teams are not able to focus on other high-value tasks such as credit and collections.
“Burdened with manual cash posting since 99% payments come in checks.”
The Chief Operating Officer of an F&B Company highlighted that even if you have an AR team that accurately and quickly posts payments, it’s not enough to cater to the evolving payment behavior of customers. The gist of it is – you may have received the payment but the open invoice has to be closed. This is to ensure that the available credit limit of the customer is adjusted so they are able to place their next order. Paper-check processing means doubling the workload with high overhead and OpEx.
When it comes to checks, your finance teams may not be able to perform same-day cash posting. The process gets even trickier when it comes to matching the invoices to remittance data. Analysts need to manually aggregate remittance information from different sources such as emails, checks, and web portals to match payments with open invoices. This is a time-consuming and errorprone process that delays straight through cash posting.
“Manually identifying deductions and creating line items makes the process slow and error-prone.”
Unwarranted deductions could prove to be costly if not resolved. We uncovered the consequences of deductions on the bottom-line while hearing from the VP of a software company. His words ring true for most mid-sized businesses; manually identifying deductions could affect the net recovery rate due to delayed resolution.
This manual and time-consuming process affects resource utilization and reduces productivity. Moreover, invalid write-offs could gravely affect your company’s financial performance.
“The more we customize our ERP, the slower it goes.”
Increasing revenue and expanding product lines are not the only critical factors for business growth. The CFO of a computer hardware company opened up about a simple fact – with a rising customer base and demand, you can’t really expect a slow system to perform under a heavy workload. It may come as no surprise that postmodern ERPs have helped businesses cut costs, reduce manual efforts, and automate clerical tasks.
But as companies scale and grow – their reliance on ERPs keep evolving to incorporate additional functional requirements. And limitations of a finance infrastructure can adversely affect your business success. Long story short – your business should not be incurring more costs to get paid faster. The question remains, is your business well-equipped to scale with your current ERP system?
“A large number of customers have switched to digital payment methods, and the current ecosystem doesn’t support digital payment methods. Such a large volume of digital payments are hard to process and apply.”
For most mid-sized businesses, cash and paper checks are still prevalent but recently, they have taken the back seat. Today, customers prefer the convenience of digital payment methods.
The CFO of an East coast based consumer goods service company agrees that customers are not likely to deal with businesses that do not offer multiple payment options. This could create a bottleneck for your business in terms of usability, flexibility, and responsiveness in AR transactions.
“The accounting functions are just not user friendly”
Opening up about the usability of ERP systems, the VP of a Brokerage firm shared how finance management systems have a steep learning curve. It is true that one of the invisible bottom line wreckers is the cumbersome user experience within accounting systems. There’s a fine line between adopting a new financial management system and making sure that your AR team understands it well.
As a result, business agility suffers from silo-ed workflows that hamper smooth AR functioning. Complicated, heavy, and linear user interfaces in accounting systems add to your finance teams’ challenges. Rigid accounting modules make it difficult to customize the systems to meet your business needs.
At HighRadius, we offer our customers a cost-effective, fast and easy to deploy, and functionality-rich solution with great ROI. Built to seamlessly complement ERPs such as NetSuite, Sage Intacct, and Microsoft Dynamics, RadiusOne AR helps your business optimize cash flow operations and focus on business expansion and growth. Get a demo of RadiusOne AR Suite for your business today.
HighRadius is a Fintech enterprise Software-as-a-Service (SaaS) company that leverages Artificial Intelligence-based Autonomous Systems to help 600+ industry-leading companies automate their Accounts Receivable and Treasury processes. Processing over $2.23 trillion in receivables transactions annually, HighRadius solutions have a proven track record of optimizing cash flow, reducing days sales outstanding (DSO) and bad debt, and increasing operational efficiency so that companies may achieve strong ROI in just a few months.
HighRadius is dedicated to providing solutions across the different stages of business growth. Starting with SMBs having a single ERP system, two to five FTEs, to enterprise-grade companies that have multiple ERPs and dedicated FTEs for handling different operational functions and global implementations, or Fortune 100 companies with shared services and multiple business units – the company caters to every business need. HighRadius’ scalable approach to the Order to Cash portfolio of solutions ranges from the RadiusOne AR Suite to the Autonomous Integrated Receivables Platform.
The RadiusOne AR Suite by HighRadius is a complete accounts receivables solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne AR Apps to improve productivity, maximize working capital, and enable faster cash conversion.
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The HighRadius RadiusOne AR Suite is a complete accounts receivable’s solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne AR Apps to improve productivity, maximize working capital, and enable faster cash conversion. Affordable, quick to deploy, and functionality-rich: it is pre-loaded with industry-specific best-practices and ready-to-plug with popular ERPs such as NetSuite and Sage Intacct. The HighRadius RadiusOne AR Suite is designed to automate labor-intensive processes while streamlining credit and collections activities for faster AR processing, better cash flow and improved profitability.
Lightning-fast Remote Deployment | Minimal IT Dependency Prepackaged Modules with Industry-Specific Best Practices.