When Good-enough isn’t Good enough.

Are you settling for less? Is it time for you to give your ERP a shot in the arm - when dealing with Accounts Receivables or Collections?

ERP - A Jack Of Many Trades 

ERPs have been around for decades. They are a category of business management software that an organization uses, to collect, store, manage and interpret data from many business activities. They are quite broad in functionality and, having been created to manage the many internal processes in an organization, their prime focus has always been to maintain and balance books. But this often leaves the ERP software – a jack of all trades. That’s because over the years, the solutions themselves have expanded greatly in their scope, going way beyond the traditional functions of finance, accounting, human resources and corporate governance. ERPs are also built around the assumption that there’s dedicated personnel available to push all data into the system while all external factors are dealt with, manually. How optimal is that, really?

What Your ERP Isn’t Giving You

If that hasn’t managed to get your attention yet, here’s more.

In the absence of a customized collections platform, there are things your ERP isn’t giving you, leaving your collections process in a far from ideal state. Here are a few of them.

1. Visibility to Internal Stakeholders: The key ingredient to a successful Collections operation is the visibility of all the relevant details – that make decision-making possible. The need for this visibility is different across various stakeholders : management and the operational finance teams and even sales teams. And ERP is suited to cater to these needs – only to some extent. Afterwards it needs the IT departments to create periodic ‘dumps’ for the finance teams to start wading through – with their own set of excels and pivot tables. These manual and inefficient process interventions lead to a lot of delays with productive time wasted only in facilitating that visibility – modifications, ad-hoc requirements and help with decision making, still far away!
2. The most basic of Collections functions such as Dunning: Since an ERP’s primary focus is managing overall internal business processes, it doesn’t cover any functional aspects of collections deeply, such as - working with partners or managing customer and stakeholder interactions around payments. Even dunning, a primary Collections task, is something that an ERP isn’t built to handle optimally – unless you invest heavily in customizing it to your needs or buy another module altogether. In the absence of any such investment, dunning – even with an ERP - is mostly manual and inefficient.
3. A Dynamic Approach to Business: Key activities such field-sales and marketing are facilitated only by some native extensions to an ERP that are usually vendor-recommended. Furthermore, if a business wants to deploy an extension, they need to bear heavy expenses of customization, and comply with the restrictions imposed by the system. This approach becomes the first casualty of vendor lock-in, mandating the business to follow what the ERP vendor has to offer, impacting the dynamism and creativity of the business' day-to-day functioning, heavily. The result? Even with the ERP, you end-up managing your own processes, especially in Collections, manually with many, many excel sheets.
4. Visibility to External Partners: Ideally, a business needs a centralized cloud-based collections management platform, which can be accessed by employees & customers on mobiles and desktops alike. An ERP controls how data is exposed to external functionaries, and used by internal ones and, in the context of managing your unpaid invoices and collections, extending visibility to external partners & customers is not considered as a part of the package. If required, it needs specialized implementation, licensing agreements & integration processes. To efficiently manage collections & serve the needs of the end users (such as a sales representative who interacts with the customer) ERPs need external resources. And currently all these interactions and data are managed over emails and spreadsheets. ERPs cannot provide visibility of workflow amongst teams or support any kind of interaction between team members or clients creating huge bottlenecks in the collections process, especially when there are disagreements and disputes.
5. Factoring in Risk in the Collections Strategy: Not all clients are the same – and there is a varying degree of behavior and risk of default associated with each one of them. This risk usually manifests in the credit policies (amount, period etc). But this risk can actually be used for other interactions too. The focus of an ERP, by design, is on internal business processes. And it doesn’t cover any external exchanges and interactions (including disputes and issues) made for collections or have any checks in place to see if these interactions have been made with the right customers, at the right time or in the right manner, leading to far from optimal results. Also, as ERP systems cannot record customer responses, any data collected, stays on spreadsheets until a transaction is made and this eliminates any scope of dynamism in the company’s Collections strategy.

ERP Versus numberz AR: The Acid Test

The core KRAs (or OKRs or KPIs) of a Collections department or team are Automating various processes in the collections value chain to improve productivity and mitigate risk, providing adequate visibility to all stakeholders of AR/collections including deep insights to facilitate decision-making and ultimately reducing DSOs and write-offs. The various initiatives by the Finance/AR organization are in service to the above.

As an industry analyst from Paystream Advisors rightly puts it, “ERP solutions have been woefully inadequate in terms of credit and collections functionality.” Let’s understand why.

All Things Considered, Why numberz AR?

With numberz AR, you can future-proof your collections processes to meet your working capital demands, while improving the overall customer experience dramatically.

What’s more, the numberz AR helps you:

• Bring down operating costs
• Study customer behavior and
• Formulate better business strategies with clear money-in projections.

And if optimizing your invoice-to-cash efficiency is what you’re after, you must consider leveraging the value of your ERP with an Accounts Receivable automation platform. Especially a platform that can integrate well with your ERP software.

The numberz AR platform integrates with all leading ERP systems like SAP, Microsoft Dynamics, Oracle, Sage and numerous others allowing you to extend the capabilities of your existing investment and get the most out of not just your ERP, but your Accounts Receivable process and your team. 

And if you’re to believe Paystream Advisors, organizations that use customized solutions for collections, get paid 20% faster than others. Scores of companies have leveraged these solutions to make their collections smoother, effective and customer friendly.

Let’s talk numberz then, shall we?