How to Automate Accounts Receivables
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
This article is sponsored by Blackline. Blackline can help automate all parts of your accounts receivables process and get all sub-processes onto one platform. Learn more about how to raise the bar on accounts receivables automation with Blackline here.?
In most mid-and large-sized companies, processes are often broken up into pieces and handled by different teams or professionals. For instance, the record-to-report process would start with a bookkeeper posting entries that are reviewed and reported by an accountant and controlled by a controller. The multiple handover points in the process create risks of errors, especially if the process is mostly manual. This is a struggle that many Finance teams can recognize.?
We find similar challenges in most finance and accounting processes—not least in the order-to-cash process. There are many causes underlying these challenges and it would be easy to blame Sales, for instance, for not following procedure. However, we will find most of the challenges when we look at the part of the processes fully owned by Finance, i.e., invoice-to-cash (I2C).?
This is one of the core transactional financial processes with the most sub-teams involved. It’s also a root cause of headaches for finance directors, CFOs, and business leaders. The pain only grows if the process is done manually. The first logical step would be to automate the process, but how do you best do that??
The Automated I2C Process?
Errors can occur all over in the I2C process—like issuing a wrong invoice, failing to do proper cash application, mishandling customers’ credit limits, and upsetting customers through improper dispute handling. And the trickiest part? Managing the tasks between the teams to ensure proper handover points and that nothing slips through cracks.?
That’s why you should automate the process and move all the tasks to one platform. Not only will it improve the process, but it will also raise accountability for everyone involved. Most importantly though, it will free up time to analyze the numbers and develop insights about customer behavior that can be used for sales and marketing activities, as an example. Let’s qualify these benefits even further:?
- Cash application: reduce unapplied cash by 99% and the manual efforts by up to 85%
- Credit and risk management: automate credit limits based on your risk policy
- Collections management: free up 25% of the team’s time and reduce overall DSO significantly
- Dispute management: process deductions at the point of payment and automatically post in the GL
- Team and task management: monitor and analyze user performance and gain the ability to quickly reassign tasks
As if this wasn’t enough, you can start to turn all the data produced from your automated process into insights about customer behavior that can fuel cash forecasts, help you understand if extended payment terms have a healthy ROI, and enable business partnering with commercial teams. What’s not to like??
Are You Ready to Start Automating??
One key concern for most companies when they consider starting an automation process is that it can seem like a daunting task. Where do I begin, and will I ever see the ROI of my investment??
The great part about automating a process like accounts receivables is that you’ll be able to see the impact relatively fast. Some companies even get their money back in as little as four months. Of course, it depends on many factors, and while the ideal situation is to get everything on the same platform, you can easily break the automation project into pieces and automate each part first before you bring it all together.?
The best part about automating your accounts receivables process is not the process improvements, but the increase in engagement in your team. Everyone gets frustrated working with a highly manual and often broken process. Fix these issues and the teams will feel they can spend more time on meaningful work and contribute to the value creation in the company. It’s a true win-win situation. How far have you come in automating your accounts receivables process and what’s stopping you from going further??
Learn more about how to raise the bar on accounts receivables automation with Blackline here.
You can read previous articles and posts from my collaboration with Blackline below:
- What would you do with 20% extra time?
- A Week In The Life Of An Accountant Post Finance Transformation
- Intercompany accounting headaches
- 4 Best Practices To Achieve Intercompany Accounting Excellence
- Cash in bank = cash in hand, right?
- Your post-transformation plan
- The trillion-dollar opportunity
- The Technology-Enabled Accounting Team of the Future
- Automating the AR process
- How To Drive Value Creation With Automated Cash Application
You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box�where you set the ambition for your transformation. You should join the?Finance Business Partner Forum?which is part of Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on?Twitter.
8 Changes For FP&A To Make To Transform Strategy?(part of a ten-article series about FP&As involvement in the strategy process)
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All Successful Business Partners Are "Leaders"?(part of a five-article series where we unfold our business partnering capability model)
Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive on our business partnering framework "BP on a Formula")
Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight?(part of case study series where I interview business partners about how they drive value creation using real cases)
Anders Liu-Lindberg?is the co-founder and a partner at the?Business Partnering Institute?and owner of the largest?group dedicated to Finance Business Partnering?on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk. I am the co-author of the book “Create Value as a Finance Business Partner†and a?long-time Finance Blogger?on LinkedIn with close to 65.000 followers and 140.000+ subscribers to my blog. Recently I became an advisory board member at?Born Capital?to help identify and grow the next big thing in #CFOTech.