Custom Image

A CFO’s Guide to Scaling Mid-Sized Businesses with Optimized AR Stack


  • Identify the ideal AR tech stack to overcome the limitations of manual AR processing and ERP software
  • Get insights into optimizing order-to-cash (O2C), improving customer experience (CX) and process visibility, and reducing IT costs
  • Unlock the true potential of your ROI to scale your business

Contents

Chapter 01

Gen-Z Approach to Finance Functions

Chapter 02

Managing AR: Where Do You Stand?

Chapter 03

Are Your Existing Options Good Enough?

Chapter 04

Ideal AR Tech Stack for Mid-Sized Businesses

Chapter 05

The RadiusOne Edge

Chapter 06

Conclusion
Chapter 01

Gen-Z Approach to Finance Functions


1.1 What Does a Finance Team Do?

Control: Keep track of past and present financial numbers

Financial planning: Map development of resources, funds, and expenses as the business grows

Financing and cash management: Resource allocation to run a business efficiently

The CFO and their team have an overview of huge data repositories that provide a high-level view of the organization. This makes them responsible for not only keeping track of financial data but also influencing operational decision-making and strategy.

1.2 Challenges of the Gen-X Approach

There are some challenges of managing finance functions the Gen-X way. Due to multiple data sources, the flow of information is interconnected and complicated. Finance teams who use manual processes spend most of their time collecting, cleaning, and analyzing heterogeneous data to create an accurate view of the businesses’ financial situation. Manual processes cannot proactively provide dynamic insights, taking away a lot of time from high-value strategic activities.
Apart from these, using primitive software imposes heavy dependence on spreadsheets, manual entry and re-keying, and a lack of dynamic reporting.

1.3 Evolution to FinTech

“…finance-as-a-service, a subsector of SaaS that is proving to be equally if not more valuable in the long run when compared to traditional back-end financial and accounting processes.”-Anna Khan, General Partner, CRV.

Finance teams seek to replace manual processes and existing legacy software to leverage value-added services such as reporting and insights. Faster tools optimize data capture and workflows. The goal is to automate as many functions as possible.
The goal of an optimized FinTech stack is to:

  1. Reduce IT costs
  2. Minimize overall OpEx
  3. Improve visibility into analytics
  4. Lower risk and propel revenue growth

1.4 Role of the Gen-Z CFO

The role of a CFO has evolved over the past decade. A CFO’s functions and responsibilities are no longer transactional. Instead, they are a strategic business partner.
Consequently, mid-market CFOs must identify the major pain points in the cumbersome finance functions and invest in the right technology that will help them scale their business.

Chapter 02

Managing AR: Where Do You Stand?


2.1 Impact of AR on Your Business

Accounts receivable (AR) represents the money owed to a business for its products and services. Improper AR management leads to sluggish collections, which negatively impacts the company’s cash flow.
Moreover, since AR facilitates payment collection, it is also pivotal to improve financial forecasting. Ineffective dispute resolution and manual billing systems make AR one of the most time-consuming finance functions. This puts AR management at the center of process improvement initiatives.

2.2 Challenges in AR Processing

Managing AR comes with a set of challenges. Most AR professionals would agree that their jobs are tedious and time-consuming because most organizations still manage their AR processes manually, with primitive business systems.
Let’s look into the challenges in detail.

2.2.1 Cost Intensive Paper-Based Manual Processes
AR teams are busy with many activities. These include:

  • Credit management
  • Invoicing
  • Tracking aging reports and payments
  • Sending reminders
  • Dispute resolution
  • Maintaining accurate customer master data
  • Cash application
  • Payment collection

Every two weeks, AR professionals sort the data and download aging reports from their spreadsheets. These are primarily a list of unpaid customer invoices based
Every two weeks, AR professionals sort the data and download aging reports from their spreadsheets. These are primarily a list of unpaid customer invoices based on the duration of past dues such as 30, 60, 90, 120 days.

At this point, AR professionals consult a previous version of the spreadsheet for notes, copy and modify those notes to the new file, and then manually follow up on each outstanding receivable by sending payment reminders.

Depending on the duration of past dues, the language of the reminder gets increasingly strong. This requires different communication templates for each aging bucket. These are often stored locally, making them prone to inconsistencies.

AR professionals then manually enter account information into the dunning template. They need to reproduce the invoice or accompanying documents such as proof of delivery and attach them to the payment reminder. Especially in case of dispute, documents such as proof of delivery are crucial as the proof of a service or goods delivered.

Relying on outdated paper-based processes and manual intervention results in delays, high costs, errors, limited process visibility, and the inability to support a consistent brand to customers.

10-15% of invoices need payment reminders, and almost 50% of B2B invoices become overdue. According to comprehensive surveys conducted by Atradius, 7-15% of invoices are sent to the wrong person, and 10-20% of delayed payments are due to incorrect information in the invoices. The average time to collect on-credit sales or the Days Sales Outstanding (DSO) is 66 days. For B2B models, that average is more than 85 days.

2.2.2 Multiple Incompatible and Inflexible Systems
Typically an AR functional mix consists of the following software resources:

  • Enterprise Resource Planning (ERP)
  • Financial Planning and Accounting (FP&A)
  • Customer Relationship Management (CRM)
  • Logistic systems

Important documents such as invoices and payment reminders rely on information that ERPs host. They form the backbone of the business. But ERPs do not support efficient workflows. They are difficult to operate and even harder to adapt to ever-
evolving business needs.
We discuss the limitations of ERP and related software, in detail, in Chapter 3.

Chapter 03

Are Your Existing Options Good Enough?


Mid-sized businesses want to keep growing. At the same time, they also want to implement cost-effective solutions to optimize their business processes.
Therefore, the primary criterion for choosing any solution to manage their AR processes should be scalability (i.e., investment or cost remains constant, but the revenue grows).
But with the volume of transactions rapidly increasing, is the range of options available at the disposal of mid-sized businesses really scalable?
Let’s have a look.

3.1 Hiring More Employees to Manage AR

As the volume of transactions rapidly increases in a growing business, the responsibility to manage AR falls on the limited number of employees in this subsection of the finance team. Therefore, it makes sense to hire more full-time employees dedicated to AR management. But even doing this is not scalable.
AR management teams need both inputs and context from various business stakeholders (both internal and external). As the volume of transactions increases, the number of vendors, customers, and stakeholders also increases.
The net output remains the same even after the team is strengthened as the AR team has to reach out to more people now.
Also, hiring more FTEs won’t solve the problem of cost-intensive paper-based manual processes. More employees will continue with repetitive tasks now instead of being involved in more strategic and critical business functions.

3.2 Solutions Built From Scratch by In-House IT Infrastructure

Often businesses will develop an in-house IT solution to eliminate cost-intensive paper-based manual processes. This approach is reasonable for enterprise-level businesses. They have an advanced IT department with dedicated resources, grow steadily, and focus on long-term ROI models. However, for rapidly growing mid-sized companies, this approach poses challenges, including:

  • Requires dedicated IT infrastructure and more IT personnel
  • Increases IT cost for implementation and up-gradation
  • Demands constant reworking and maintenance with business growth

3.3 ERP, FP&A, CRM, and Related Software

ERPs provide a foundational tech stack for business processes, forming the backbone of a business.
However, the layout has no flexibility to create invoices with ERPs. It requires time and resources to make any changes. The option to combine an invoice with a related document is also limited.
In this scenario, an inflexible system becomes a challenge. The situation becomes further complicated when multiple such systems have to communicate with each other effectively. Process flexibility and visibility require information consolidation across entities.
For example, communication preferences are stored in a CRM system, and proof of delivery may be in another system altogether. The information resides in multiple systems. As a result, the systematic capture and follow-up of outstanding receivables become a daunting task.
While ERP and related software may resolve the issue of cost-intensive paper-based manual processes, it does not fully resolve the problem of multiple incompatible and inflexible systems
Challenges of using ERP can be summed up as follows:

  • Primitive and complex ecosystem
  • Disconnected databases
  • No visibility into productivity of processes
  • Not tailor-made for AR needs
  • Difficult to (co)operate

3.4 Enterprise-Grade, Expensive Software

Mid-sized businesses constantly seek dedicated technology to help reduce the burden of outstanding receivables while ensuring business scalability.
But many solutions used to deal with AR concerns in the mid-market space are built for large enterprises. The solutions are ‘torn down’ and modified to address similar problems related to AR.
While these solutions are inherently sophisticated, they pose some problems for mid-sized businesses, which include:

  1. Not a good fit for simpler mid-market models
  2. High IT dependency
  3. Premium cost
  4. ROI is long term

This is why even though enterprise-level businesses successfully transition to optimized AR with digitization and automation, there is an automation gap for mid-sized companies that need to be addressed.

3.5 Why Automate AR?

As you can conclude, none of the above approaches can help mid-sized businesses scale.
AR processes are under constant pressure to:

  1. Shorten invoice-to-cash cycles
  2. Reduce costs (IT and operations)
  3. Improve process visibility
  4. Release additional liquidity (enhancing cash flow)

B2C customers want an array of invoice delivery options and B2B buyers seek efficiency gains for their accounts payable (AP) process.
This can happen when the right solution is used to automate AR processes

Chapter 04

Ideal AR Tech Stack for Mid-Sized Businesses


4.1 Need of the Hour

CFOs need to define clear business objectives and analyze ROI when they select AR automation tools.
To maintain healthy cash flow and address AR needs, mid-market CFOs need to invest in:

  1. Non-intrusive, ‘ready-to-use’ or ‘plug-and-play’ technology
  2. Standardized automated processes to replace manual workarounds

At the same time, they need to harness the power of data and enhance finance functions and business growth. CFOs need to Invest in solutions that offer dynamic reporting and increased visibility into analytics.

These functionalities include:

  1. Overview Dashboard: Consolidated view to AR that aggregates information from multiple systems
  2. Visibility into adjacent processes: AR is part of the extended order-to-cash(O2C) cycle. Information and documents related to other processes in the O2C cycle must be readily available for efficient AR management
  3. Customer Portal: Customers need a single and secure location to access all paid and outstanding invoices and manage their communication preferences

4.2 But, Why Plug-and-Play?

Integrations are a great way to optimize your AR tech stack.
Most businesses already have a part of their financial stack established, such as the ERP software. So it is critical to find solutions that seamlessly integrate with your software and solve the current issues.
Leveraging plug-and-play solutions create added value.

  1. Integrations do not require the replacement of existing software. As a result, prior investment in technology is not wasted
  2. Cloud-based integrations are inherently cost-effective as you do not need to build from scratch. The solutions address AR issues in current ERP software, thereby enhancing the utility of the existing software and unlocking its potential
  3. Standardized automated processes free up AR professionals’ time to pursue more value-adding activities, and increase the true potential of your ROI

Plug-and-play solutions fit into your existing software and enhance them exactly as you need.

Chapter 05

The RadiusOne Edge


At HighRadius, we understand the importance of outstanding receivables, especially when businesses want to scale and maintain a healthy cash flow.
We also understand the needs of a mid-sized business from a technological and a financial perspective. The goal is to close ‘the Automation Gap’ with cost-effective, ready-to-use solutions that provide stellar customer experience (CX) and impact all sub-sections of AR management for businesses operating with 1 ERP software and ~2-5 FTEs for O2C.
This is where the RadiusOne AR Suite comes in!

5.1 What is RadiusOne?

HighRadius RadiusOne AR Suite is a tailor-made solution built for mid-market CFOs:

  1. Artificial Intelligence (AI)-powered, automation based AR solution
  2. Gets up and running in 28 days
  3. Seamlessly connects with NetSuite, Sage Intacct, Microsoft Dynamics, and other ERPs
  4. Pre-packaged modules with industry-specific best practices
  5. Requires minimal IT dependency

RadiusOne fast-tracks key AR functions viz. e-Invoicing and Collections, Cash Reconciliation, and Credit Risk Management.

5.2 How Can RadiusOne Digitally Transform AR?

RadiusOne AR suite builds its functionalities on top of existing software. Its enterprise-grade CX is affordable and quick-to-deploy. It particularly automates the labor-intensive and time-consuming AR functions, allowing finance managers to focus on high-yield and business-critical decisions.
CFOs will maximize their working capital, achieve high ROI gains, and enable hard cost savings by putting the O2C on auto-pilot.
This makes RadiusOne a scalable AR solution for mid-sized businesses.

Chapter 06

Conclusion


According to Harvard Business Review, one-third of the US private sector GDP (and employment) constitutes businesses targeting the mid-market space. Mid-sized businesses invest a chunk of their revenue back into R&D, and there has been a ton of innovation in the mid-market to deliver more products and services to the customers.
Ignoring back-office processes, however, can affect their revenue stream. As a result, most mid-sized organizations want to automate their AR functions.
Mid-market CFOs play a significant role in bringing about this digital transformation. They need to position themselves as strategic leaders and invest in scalable technology that can address the unique needs of their businesses.

6.1 CFO’s Checklist

HighRadius RadiusOne AR Suite is a tailor-made solution built for mid-market CFOs:

  1. Implement strategic workflows on a unified platform for simplified approval and streamlined collaboration.
  2. Implement a strict KPI tracking system to improve AR visibility.
  3. Implement standardized credit approval and management systems to avoid financial risks and minimize bad debt.
  4. Create a customer-centric strategy to make the UX simple and intuitive Requires minimal IT dependency

6.2 AR Journey with HighRadius

A company’s growth is synonymous with its increased functionality requirements in the O2C cycle. While the requirement curve may be linear, the features and cost of the solutions to address those requirements increase exponentially.
Most companies cannot keep up with constantly evolving business complexities and fail to find a scalable solution every step of the way.
This is where HighRadius comes in with its unique portfolio of autonomous software to manage AR (and more
Since AR solutions need constant reworking in terms of technology, features, and deployment methods with business growth, HighRadius has a tailor-made option for every step:

  1. RadiusOne AR Suite.
    For small and mid-sized businesses (SMBs) with 1 ERP and 2-5 FTEs for O2C.
  2. AI-Enabled Integrated Receivables
    For enterprises with more than 1 ERP, FTEs in dedicated teams for different O2C functions and global implementation.
  3. Autonomous Integrated Receivables
    For Fortune #100 companies with more than 1 ERP, multiple BUs, and shared services, FTEs in dedicated teams for different O2C functions, global implementation, and complex payment scenarios.

HighRadius’ solutions scale with your business growth!
Here is what some of our customers have to say.

Executive Summary

Managing accounts receivable (AR) is an integral part of the back-office operations of any organization. However, mid-sized businesses do not have dedicated teams to manage order-to-cash (O2C) functions. They also have limited in-house IT infrastructure to support the growing needs of the business.

Outstanding receivables have a direct impact on the cash flow of the business. Therefore, finance teams are constantly seeking to optimize AR management processes. Even though there is a range of options available for mid-market CFOs to manage AR, they do not always align with the needs of their business.

Today, CFOs play a pivotal role as strategic leaders. In the following chapters, we would discuss:

  1. Impact of AR on the long-term success of a business
  2. Limitations of manual approach to processing AR
  3. Challenges of business systems such as ERP, FP&A, and CRM
  4. Ways to overcome these challenges and digitally transform AR management with

Through this eBook, mid-market CFOs will be able to better assess their current state of AR management and understand why should they invest in a scalable AR tech stack that:

  1. Reduces IT cost
  2. Minimizes invoice-to-cash cycles
  3. Improves process visibility and enhances customer experience (CX)
  4. Frees up the AR team’s time for more business-critical tasks
  5. Reduces operational expenses (OpEx) and improves return-on-investment (ROI) the right tech stack
Chapter 01

Gen-Z Approach to Finance Functions


1.1 What Does a Finance Team Do?

Control: Keep track of past and present financial numbers

Financial planning: Map development of resources, funds, and expenses as the business grows

Financing and cash management: Resource allocation to run a business efficiently

The CFO and their team have an overview of huge data repositories that provide a high-level view of the organization. This makes them responsible for not only keeping track of financial data but also influencing operational decision-making and strategy.

1.2 Challenges of the Gen-X Approach

There are some challenges of managing finance functions the Gen-X way. Due to multiple data sources, the flow of information is interconnected and complicated. Finance teams who use manual processes spend most of their time collecting, cleaning, and analyzing heterogeneous data to create an accurate view of the businesses’ financial situation. Manual processes cannot proactively provide dynamic insights, taking away a lot of time from high-value strategic activities.
Apart from these, using primitive software imposes heavy dependence on spreadsheets, manual entry and re-keying, and a lack of dynamic reporting.

1.3 Evolution to FinTech

“…finance-as-a-service, a subsector of SaaS that is proving to be equally if not more valuable in the long run when compared to traditional back-end financial and accounting processes.”-Anna Khan, General Partner, CRV.

Finance teams seek to replace manual processes and existing legacy software to leverage value-added services such as reporting and insights. Faster tools optimize data capture and workflows. The goal is to automate as many functions as possible.
The goal of an optimized FinTech stack is to:

  1. Reduce IT costs
  2. Minimize overall OpEx
  3. Improve visibility into analytics
  4. Lower risk and propel revenue growth

1.4 Role of the Gen-Z CFO

The role of a CFO has evolved over the past decade. A CFO’s functions and responsibilities are no longer transactional. Instead, they are a strategic business partner.
Consequently, mid-market CFOs must identify the major pain points in the cumbersome finance functions and invest in the right technology that will help them scale their business.

Recommendations

7 Automation Technologies Revolutionizing Receivables Collections Today

HighRadius + Ordway: Powering Order to Cash with Billing & Revenue Recognition Automation

Cooking the perfect collections plan this thanksgiving

There's no time like the present

Get a Demo of RadiusOne A/R Suite for Your Business

Request a Demo
Request a demo

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.

Automate Your Order-to-Cash Today!