Getting accounts receivable (AR) right should be a point of focus of any business that wishes to retain a professional outlook and appreciative customers. Annoyed customers being chased for payments they’ve already made, large levels of unallocated cash on account, increasing day sales outstanding DSO figures and the need for high debt value provision are all symptoms of mismanagement. However, the results of implementing an automated process for accounts receivable can be startling, and in many cases the cost of investment can be paid back within a matter of weeks.
One of the most effective means of automation is though intelligent document scanning and workflow processing. Such system automation can halve the cost of cash allocation per invoice and deliver greater levels of control than previously available. Performance indicators, such as the management cost per invoice, become instantly identifiable.
With every transaction recorded to identify the user and the action carried out, an electronic audit trail can trace a receipt to allocation or an allocation to receipt. Every receipt generated can have a status assigned during the life cycle enabling the user / management to identify where receipts are in the process and to log queries against them, effectively ending the need for ‘chase the payee’ notes.
Unlike the traditional manual process which is almost impossible to performance manage; an automated process constantly updates the number of receipts remaining unallocated and their status. This provides a greater accuracy to allocation of funds. This can be further enhanced if an auto-matching process is also enabled within the document scanning and workflow process.
Automating unallocated cash through a system driven approach improves the ease of matching and the visibility of where receipts are currently allocated. In many cases, more than 98% of receipts are allocated to invoice first time. This enables credit control personnel to focus on a very small number of queries, ensuring that these are dealt with quickly and efficiently, vastly improving the cash position of a company.
Deploying automation in to the accounts receivable processes is simple and intuitive. Training can take a matter of hours and improvements in processes and reporting can be seen as soon three weeks after implementation.
The latest generation of automated AR systems have shown in real world case studies that, even where two people undertake the existing process, up to 75% of their time can be reallocated to other, more valued added activities. Speedy Hire said, “We have achieved a resource saving equivalent to around 70% of the original team, and reduced unallocated cash by around 80%”.
Aggregate Industries which now puts 90% of the company’s order-to-cash finances through automation said, “As a business, automating has really helped the credit team concentrate on cash collection. We reduced unallocated cash by £12m in the first three months.”
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