8 Crucial Questions To Ask When Streamlining Your A/R Processes

How has the role of a finance exec, like the CFO or Controller, changed over the years? 

They now need to have a high-level look at what’s going on and be able to forecast the financial future of a business. This means, investing in technology to improve those manual processes. 

If you’re one of the many companies that pushed the A/R process to the back burner you’re not alone.  

Morris Kupfer, VP of HighRadius, answered these 8 crucial questions when thinking about streamlining your A/R processes: 

1. What are some things holding finance execs’ teams back in 2022? 
2. How has the role of a finance exec like a CFO or controller changed over the years? 
3. What are the crucial areas of investment in a finance leader’s digital transformation journey and what does that look like? 
4. What are the biggest risks to achieving A/R goals for a finance exec? 
5. What are areas of automation in A/R that organizations can invest in, and how does that relate to what HighRadius offers? 
6. How can finance leaders improve the average time to invoice? 
7. How can organizations decrease average days delinquent (ADD)? 
8. What’s the best way to improve the cash application as a process? 

What are some things holding finance execs’ teams back in 2022? 

We’re all drowning in data but starving for information. So what do we do with that and how do we make it meaningful and add value. 

Siloed workflows - Communication and teamwork are always the issues when it comes to reporting. Operating managers frequently lack sufficient input or buy-in to the financial planning process and are unaware of how their decisions affect the overall profitability. Financial reporting should be a collaborative effort between financial and non-financial managers. 

Primitive and disconnected systems - Businesses that rely on manual processes take 67% more time to collect past dues (Source: PYMNTS) Having all information about customers, their payment statuses and trends, and financial health is important to ensure successful payment collection. Having accurate customer data at your fingertips ensures successful client conversation devoid of any confusion or misleading info. 

How has the role of a finance exec like a CFO or controller changed over the years?

The finance exec went from a number cruncher to a visionary. They need to have a high-level look at what’s going on, be able to forecast the financial future of the business, and invest in technology to improve manual processes. 

The focus areas for a finance exec should include:  

• Bird’s eye view of A/R performance 
• Drive digital transformation  
• Upskill finance teams 

What are some of the factors that have contributed to this change, this evolution of the role of the CFO or controller? 

Over the years there has been increased scrutiny of financial reporting. Controllers are now required to backfill traditional CFO duties. There has also been this rapid technology disruption (Ride the wave of change, can’t resist it). Attracting and retaining talent is increasingly becoming a concern for business management teams, including the CFO and his office. The ‘great resignation’ has also hit this industry with firms finding it harder to attract and retain accounting staff. 

What are crucial areas of investment in a finance leader’s digital transformation journey and what does that look like? 

It’s important to invest in three key areas: Process, People, and Technology. 

Process: According to CFO Dive, 43% of execs plan to automate A/R in 2022. Digital transformation in terms of the process means having insights into customer payment trends. It means being able to track key A/R metrics in real-time. Most importantly, it means having visibility into cash forecasts. Doing the A/R process manually promotes human error and risk to the company. 

People: Sage Intacct, one of our partners said from a recent study that 84% of finance leaders say automation has improved their business productivity significantly. Investing in key people and offering them ways of doing their work better/faster streamlines the whole process. Simplified workflows, prioritized and automated worklists, and automating dunning and making it dynamic are all ways to improve the efficiency of the A/R process and keep your employees happy and satisfied.  

Technology: Gartner recently put out that 67% of finance executives believe their organization must become more digitized. This should come as no shock to anyone with the implications of the pandemic and how we’ve all had to adapt. Technology brings unified systems together for seamless team collaboration. It centralizes a data repository as a single source of truth. Intelligent automation (RPA and AI), like what HighRadius solutions offer, reduce manual and repetitive financial tasks. That’s how digital transformation plays out in 2022 and beyond.  

What are the biggest risks to achieving A/R goals for a finance exec?  

A few of the biggest risks are disparate systems and data sources. Siloed workflows and lack of real-time actionable insights into the overall cash flow position of the company. 

Spreadsheets do not streamline processes; they complicate them. They're not part of a workflow or collaborative system and do not have version control and change management practices. Organizations relying on disconnected spreadsheets as their main tool for analysis will have to create an organized way of capturing, organizing, and processing valuable information. 

Many mid-size businesses continue to struggle with their IT systems. The lack of IT investment planning has resulted in companies spending randomly on popular solutions, leading to disparate systems that are data silos and often not the most efficient tools. 

What are areas of automation in A/R that organizations can invest in, and how does that relate to what HighRadius offers?  

Credit automation means onboarding customers faster. E-Invoicing ensures timely delivery of invoices. Cash application automation equals hands-free cash posting. Automated collections will enable you to scale all of your collections efforts. HighRadius offers all of these modules as an integrated receivables solution, or as standalone modules based on your needs. They also have an offering for the mid-market called RadiusOne solutions perfect for a mid-market companies. 

How can finance leaders improve the average time to invoice?  

Create a self-service customer portal to view invoices easily because that is what your customers do on day to day basis with their own personal finances. 

Streamlining collaboration with internal teams means one source of truth. No more misconstrued data.   

Introduce a single portal that includes all relevant backup documents, such as Proof of Delivery (PODs) and Bill of Lading (BOLs). 

You can lower invoicing time by 33% and bring the average time to invoice from 3 days to 2 days by increasing efficiency and minimizing manual, paper-based processes. (The Hackett Group) 

How can organizations decrease average days delinquent (ADD)? 

I don’t know about you but collections calls are the last thing anyone wants to do. Imagine sending proactive reminders to customers before the payment due date. You can also prioritize the collections process based on risk categories. The self-service customer portal makes it so easy to view invoices and make payments. All of this can lower your ADD by 60%, which is going from 10 days to 4 days just by improving your collector’s productivity and faster invoice-to-cash conversion.  

What’s the best way to improve the cash application as a process? 

Auto-aggregation of remittances from multiple sources (mail, EDI, web portal). Automated payments to remittance matching and exception handling. You can get to 2 times faster cash posting that’s hands-free by putting more of a focus on high-dollar value functions and lowering time-to-cash. 

About HighRadius  

HighRadius is the only provider of the Integrated Receivables platform for the entire credit-to-cash cycle. We are the #1 receivables player in the Fortune 1000 market today, and we have a fast-growing presence in the mid-market space as well. On an annual basis, our platform processes over a trillion dollars of receivables.  

In 2020 we made two exciting announcements: HighRadius is now classified as a Unicorn Company, which means we are a privately-held start-up valued at $1B.  We achieved the unicorn status and also launched our dotOne performance dashboard for global businesses aspiring to achieve dotOne (0.1%) status. We also launched our RadiusOne A/R suite specifically for mid-sized businesses.  

We integrate with many ERPs including Microsoft Dynamics.   

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