Your Business Can’t Afford Not to Automate AR Processes

From inflation and reduced cash availability to supply chain constraints and regulatory demands, today’s finance leaders must navigate unrelenting economic headwinds while trying to compete in an unpredictable global market. So, it’s understandable that some CFOs are hesitant to allocate resources to invest in new technologies and revamp standard operating procedures, such as accounts receivable processes.

Ironically, though, many are going in the other direction. They’re transforming their AR operations by adopting best-of-breed, automation solutions that are designed to make AR operations more efficient. They’re making these systemic changes not in spite of unpredictable market forces, but because of the challenges they pose.

Leaders are transforming AR operations by adopting automation solutions designed to make AR operations more efficient because of the challenges unpredictable market forces pose.

In fact, these leaders believe that relying on manual processes and legacy technologies puts their organizations at more risk than if they were to make holistic improvements to their AR ecosystems. Why? Because conventional systems waste a huge amount of time, so they are extremely costly. By incurring such expenses, businesses jeopardize their ability to mitigate market challenges and prepare for long-term growth.

According to a recent IDC survey of more than 200 finance executives around the world (most at companies with greater than $100 billion in assets), 56% of respondents said they urgently need to reduce the cost of current data collection, correction, and reconciliation.

In other words, businesses must update operational strategies because the cost of doing nothing is simply too great.

Let’s look at the financial risks that organizations incur by continuing with their current AR processes and explore the cost savings that come with modernizing these operations.

For most organizations, accounts receivable transactions mark where the rubber meets the road. That is, AR teams’ ability to manage transactions swiftly and accurately has a significant—and often direct—impact on a company’s profitability margins.

Delving into these issues in more detail, it’s clear that relying on status-quo AR operations can negatively impact a company’s bottom line in the following ways:

• Cost of staff time. When organizations depend on outdated, manual processes, credit teams spend a great deal of time trying to reconcile transactions. The cost of these hours—which often requires the hiring of additional staff or overtime pay—can get expensive.

• Restricted cash flow. The more time AR teams need to process payments, the longer they take to close. This can reduce or restrict working capital, so businesses have less ability to invest in new resources and grow (PwC has estimated that $1.7 trillion was held hostage on global balance sheets in 2022).

• Higher borrowing costs. At a time of increasing inflation and interest rates, organizations that are processing AR transactions using conventional means take on added cost and risk when they borrow to cover budgetary gaps or ensure they have enough working capital.

• Provisioning Bad Debt. As aged debt increases, companies will have to increase provisions as part of their accounting policies, which will ultimately reduce profitability. This can be particularly costly when drastic market changes simultaneously drive significant numbers of customers to insolvency.

Finance leaders recognize the need for change. According to the aforementioned survey from IDC, 84.5% of respondents agreed that modernizing financial operations will be an essential element to compete in volatile local, regional, and global markets, and over 75% said they were already investing in finance modernization.

What’s driving the call is the proven benefit that intelligent automation solutions bring to optimized AR systems. Namely, the benefit of time savings since these tools dramatically speed up operations and improve efficiencies. They include such tools as:

• Machine Learning—builds intelligence with every transaction and therefore transforms the process.

• Automated Workflows—automates the application of payments providing greater accuracy and visibility of customer indebtedness and allowing better decision making.

• Data-Driven Analytics—processes huge amounts of data and automates the production of up-to-date, actionable insights that inform AR strategies.

• Single-Pane-of-Glass Dashboards—centralizes visibility allowing AR team members and finance leadership to track payments wherever they are, reducing errors and duplicate tasks.

• Cloud-Native Architecture—enables development teams to meet the demands of highly dynamic markets.

A case in point is Atkins, a subsidiary of the engineering and project management company SNC-Lavalin, which historically managed AR with a combination of an ERP system and manual processes. The company began using BlackLine’s Cash Application solution to process AR transactions. The product’s ease of use and its ability to save accounting teams and auditors a great deal of time allows the company to significantly lower its operational costs.

Today, Atkins estimates that organizations can reduce their costs by at least 75%. “The cost versus benefit is a no-brainer,” says Tracey Bentley, Head of Accounts Receivable for Atkins. She explains that with BlackLine’s solution, AR is now a “cleaner, easier process” with more visibility throughout the system.

Plus, “if you can build a business case where a solution can effectively pay for itself in a very short space of time, then that’s a win-win,” Bentley adds.

Finance leaders who question whether this is the right time to invest in AR automation technologies should think again. Those who stick with outdated, manual processes are wasting valuable time, and, as a result, incurring unnecessary delays and cost.

On the other hand, organizations that replace conventional processes with best-of-breed, automated solutions can significantly save on costs by improving operational efficiencies. Ultimately, this allows finance leaders to focus more on value-added tasks and fulfilling long-term growth strategies.

Get your copy of this exclusive survey report AR in 2023: Expectations, Technology, Opportunities to learn recommendations for AR success in 2023 and beyond.