In the digital age, when transactions are expected to be smooth and seamless, many organisations still face disruption and delays in their order-to-cash process, the knock-on effects of which can be detrimental in terms of working capital, customer relationships and business growth.

Finance Director Europe looks at how automation of accounts receivable can put a company’s data to work – and unlock new opportunities for value creation.

Everyone likes to get paid for their work – and the quicker they get paid, the happier they are. This is true on an individual level, and at enterprise level.

Swift and seamless payment of invoices enables a business to put its revenue to work and build towards the next stage in its growth.

Conversely, delays in payments from customers restrict cash flow, diminish working capital and, ultimately, hold back a business from pursuing its strategic goals.

The order-to-cash (O2C) process is where these pain points arise and is therefore a natural place for organisations to focus – with accounts receivable perhaps the most critical area of all. Until now, however, it has often been overlooked in the search for efficiency.

Enterprises may understand the need to avoid late payments, manage disputes effectively and keep days sales outstanding (DSO) to a minimum. But they often have highly inefficient processes in place.

Much of the AR process is still handled manually, workflows are complex and inefficient, and the collections process is frequently dogged by manual errors, inaccuracies and delays.

In other words, conventionally managing AR is by no means easy. There are numerous components to address, from multiple internal and external data feeds to the complex reporting obligations.

The importance of AR in accelerating cash flow, keeping a firm grip on DSO, improving invoice management and, fundamentally, creating stronger customer relationships nevertheless means that the complexity must be met head-on and conquered.

The question is how a company can quickly affect meaningful change to control DSO, increase the productivity of employees in the AR function, improve cash flow, manage disputes and improve customer engagement. The answer is automation.

Accelerating automation

The market for AR automation has already seen explosive growth in recent years, and the pace of that growth is set to quicken. Adroit Market Research estimates that the market could be worth $4bn by 2025, as companies wake up to the advantages of removing manual and paper-based processes.

As adoption continues to grow in key industry sectors such as manufacturing, finance, retail and consumer goods, the gains could be significant.

A study from Market Insights Reports, which has looked at the potential expansion of the market between 2021 and 2025, concludes that automation across returns processing, workflow management, customer support management, accounting and finance, ERP management and marketing, and consumer behaviour analysis could save as much as $2trn globally – by eliminating the human element from many key tasks.

The rapid growth of the e-commerce sector is also a powerful force driving AR automation. Online sales in the US, for instance, are expected to double by 2023, meaning they will account for as much as 25% of the retail sector.

Some of the growth in online sales – and in the digitalisation of transactions in general – has been driven by the Covid-19 pandemic, which has pushed businesses and their customers to increasingly virtual interactions.

In such an environment, finance leaders need to look at how digital transformation can be implemented in the AR process, and consider which technologies might help them to achieve results in the most efficient way.

The growth in the automation space has been fuelled partly by the efforts of solution providers to cater for growing demand.

Some of those companies have a very broad approach to enterprise processes, while others – notably HighRadius – are highly focused on the AR space and the application of artificial intelligence (AI), machine learning (ML) and workflow optimisation tools in the O2C process.

Ultimately a CFO needs to find a technology provider that will help unlock the value of internal and external data – and embed data-led intelligence into day-to-day finance practices like AR.

This requires a vendor with intimate knowledge of both processes and pain points, as well as the ability to combine both business and technological expertise to automate manual tasks and integrate all of the requisite data feeds.

Embracing digitalisation

The CFO can undertake a comprehensive review of the O2C process and identify where delays and disruption are caused by manual processes, thereby determining where automation might bring the greatest advantage.

However, the move to automation can only be made when they fully accept that the less human input there is in AR, the more efficiently the process will flow.

The technical aspects of improving productivity in the AR function and centralising key data feeds are simple enough for vendors like HighRadius – thanks to the ongoing development of solutions and a constant hunger for innovation.

Many financial institutions and retail businesses, along with other industry sectors, have proved this point already.

HighRadius has, for example, delivered tangible results to the likes of global nutrition brand Danone, ride-sharing giant Uber, and Swiss insurance company Zurich – whether to reduce days deductions outstanding (DDO) or days sales outstanding (DSO), or to accelerate cash application.

That said, it is not only large multinational enterprises that are benefitting from AR automation. SMEs are also seeing the opportunity to improve efficiency and optimise cash flow. A large proportion of US SMEs are reported to have integrated some workflow automation, or are considering it, and that trend is spreading fast around the world.

Though it counts many multinationals among its clients, HighRadius has also developed its solutions to suit middling enterprises that don’t have the IT resources to consolidate on an ERP platform but still want to automate and streamline their receivables and treasury processes.

The key to this is a suite of cloud-based, AI-driven solutions that help companies to get the best from their people – who it supports with tools designed to assist with better, faster, data-driven decision-making.

Finding the perfect partner

The philosophy of HighRadius is to find the synergies that arise when humans and machines work together, optimising the efficiencies of automation. The company’s autonomous collection solution is a prime example of this drive to data-driven decision support.

The solution manages workflow, optimises call lists and initiatives calls, captures essential features from customer interactions and creates action items, leaving the agent to do what they do best – engage with customers.

Behind that capability is the core of the company’s platform, which draws together multiple data feeds and formats from across the enterprise, integrating them with external data sources to identify and prioritise the customer calls that need to be made, or the disputes that need to be managed.

All of this is delivered using cloud-based, software-as-a-services (SaaS) technology, which gives organisations a central repository of AR information that can be easily and securely accessed from anywhere.

As the cloud, AI and ML increasingly pervade all aspects of forward-looking businesses, CFOs would do well to consider how they can transform the AR process – which is crucial to a company’s strategic planning and future growth.

CFOs will increasingly be required to make sure that customer touchpoints in the finance function are aligned with the broader digital transformation process that so many firms are starting to undertake.

“As the cloud, AI and ML increasingly pervade all aspects of forward-looking businesses, CFOs would do well to consider how they can transform the AR process – which is so crucial to a company’s strategic planning and future growth.”

The benefits for customers, meanwhile, will be the ease with which they can pay invoices – vital in a world where online businesses are taking customer service to the next level. Naturally, engagement with suppliers will improve too. For those suppliers, improved cash flow will be the foundation of their strategic development.

In the latest IDC MarketScape Report, one quote read: “Consider HighRadius when you are looking for an O2C platform capable of handling large, complex processes and IT landscapes,” proving the quality of service and partnership that HighRadius offers.

The right partner will have the tools to both take the strain of traditionally manual processes – and empower the humans in the loop to operate more effectively and actually apply their skills where they are most needed.

Embarking on a journey towards AR automation seems inevitable for many enterprises. But the first step – finding the right solution provider – is the most important of all.

Download the full, exclusive FDE supplement on AR Automation, produced in partnership with HighRadius.

This article originally appeared in FDE summer 2021.